CBSE EXAMINATION PAPER-2022

Read the following test carefully and answer, Q. No.-12 and 13, given below:

Chinese Economy Risks Deeper Slowdown than Markets Realise (Bloomberg, 24th October, 2021)

China's Economy risks slowdown faster than global investors realise. It is pushing to cut its dependence on real-estate. It has started regulating sectors from education to technology, as it is facing power shortage and the pandemic.

Many economists have warned that the GDP growth rate will fall to 8.2% this year and to below 5% in the next year.

China is now planning to stabilise debt growth, curb inequality and channelise resources into hi-tech manufacturing. Data released in last week already showed a sharp slowdown in third quarter GDP growth to 4.9% from 7.9% in the previous quarter. There is more pain likely to come as electricity shortage persist, while new COVID-19 infections are expected to rise in coming days.

Even before the pandemic hit, China was surprising economists with slower-than-expected growth rate caused by the easing off debt risks. China's Premier Li Keqiang, announced in March a growth target of "above 6%" in the coming financial year.

China has signalled, in recent weeks that it could loosen some policies like telling banks to pick up the pace of mortgage lending as a short term stimulus. Governor of People's Bank of China Yi Gang, recently said he sees an expansion of about 8% for this year.

China's slowdown comes as the global recovery from COVID-19 risks looses momentum. Among those at risks from falling investments in China are commodity exporters like Australia, South Africa, Chile, Peru and Brazil. Slower trades could also hit countries like Malaysia, Singapore and Thailand.

The other risk is that China's policy-makers may struggle to flick the switch back to growth model if they feel that's needed. Economists noted that the electricity shortages that are crimping industrial production will make it harder to cushion growth by boosting investment in infrastructure. That kind of policy could only work next year once the power crunch eases.

Using a suitable example, distinguish between positive externalities and negative externalities.

Using a suitable example, distinguish between stock variables and flow variables.

Justify the following statement with valid argument:

'At higher levels of income people generally have lower Marginal Propensity to Consume (MPC).

State any two harmful effects of Global warming.

State any two advantages of 'sustainable development'.

Calculate equilibrium level of income for a hypothetical economy, for which it is given that:

(i) Autonomous Investments (I) = 2,500 crores, and

(ii) Consumption Function; C = 1000 +0.8Y

where C= Consumption and Y = Income

Calculate, change in Income (△Y) for a hypothetical economy, for which it is given that:

(i) Marginal Propensity to Consume (MPC) = 0.75, and

(ii) Change in Investments (△I) = 20,000 crores.

In any country, as the income rises the composition of infrastructure requirements changes significantly.'

Do you agree with the given statement? Support your answer with suitable argument.

Estimate the value of Nominal Gross Domestic Product (GDP) for a hypothetical economy. The values of Real Gross Domestic Product (GDP) and Price Index are given as₹ 500 crores and 125 respectively.

Compare and analyse the health status of India and Sri Lanka, on the basis of any two indicators from the given schedule:

Using a hypothetical example, elaborate the working of investment multiplier in an economy.

India has been dealing with the problem of Deficient Demand, since the imposition of Covid lockdown in March 2020'.

State and discuss any two monetary policy measures to combat the situation of Deficient Demand in India.