SOLUTIONS
2022 BOARD EXAM
CBSE CLASS 12-HUMANITIES ECONOMICS Board Paper 2022 — Set 2
2022
ECONOMICS
CLASS 12-HUMANITIES
CBSE EXAMINATION PAPER-2022
ECONOMICS
(Solved)
General Instructions :
Read the following instructions carefully and follow them :
- This question paper contains 18 questions. All questions are compulsory.
- This question paper is divided into 4 sections.
- Section A – questions number 1 to 1 are case based questions
- Section B – questions number 2 to 9 are short answer type i
- Section C – questions number 10 to 15 are short answer type ii
- Section D – questions number 16 to 18 are long answer
- There is no overall choice given in the question paper. However, an internal choice has been provided in few questions.
- Use of calculator is NOT allowed.
Section A
Read the following text carefully. Answer questions on the basis of the given text and common understanding :
Year 2020 began with the once-in-a-century pandemic, which saw the frontline workers working tirelessly to save human lives from COVID-19. The pandemic caused its ripples on the economy and on social sectors. Governments, at all levels, intervened in a timely manner to respond to the pandemic.
India has one of the lowest case fatalities rates of less than 1·5%. India has been able to save lakhs of lives through its effective policy responses. Public spending on social sector was increased in 2020 21 to mitigate the hardships caused by the pandemic and the loss to livelihood due to the lockdown.
The lockdown period saw the growth of the 'gig economy' and increasing 'work from home' in the organised sector. As per the Periodic Labour Force Survey (PLFS) report 2018-19, there was an increase in workforce totalling 48-78 crores in 2018-19 as compared to 47-14 crores during 2017-18. Out of 1-64 crores increased workforce, 1-22 crores were in rural sector and 0-42 crores in urban sector.
The female labour force participation rate increased from 17·5% in 2017 18 to 18·6% in 2018 Provident Fund Organisation (EPFO) as on 20th December, 2020 shows a net increase of new subscribers of 78·58 lakhs in 2019 20 as compared to 61·1 lakhs in 2018 19. The PLFS report also showed improvement in 2020 21 (Quarter 4) when compared to 2019 20 (Quarter 4).
Considering the proportion of the male workforce, casual labour decreased by 1% points, while self-employed and salaried workers increased by 0·6% points and 0·4% points respectively. Similarly, in case of female workforce, self-employed increased by 2% points, regular/wage salaried workers decreased by 0·7% points and casual labour decreased by 1·4% points.
(1) State and discuss any two initiatives taken by the Government to control the adverse impacts of the pandemic.
(2) Analyse the nature/distribution of Indian workforce for the fourth quarter of the year 2020-21.
Section B
1. Avoiding double counting: While calculating income from various sources like wages, rent, interest, and profits, care must be taken to include only the final payments and avoid counting the same income more than once.
2. Excluding transfer incomes: Transfer payments such as pensions, scholarships, and gifts should not be included as they do not represent payments for current economic activity and do not contribute to national production.
1. Chemical fertilizers cause soil degradation by reducing its fertility over time because they destroy beneficial microorganisms and reduce the natural nutrient content in the soil.
2. They pollute water bodies such as rivers, lakes, and groundwater when they get washed away by rain, leading to harmful effects on aquatic life and making water unsafe for drinking and irrigation.
Distinguish between 'Value of Output ' and 'Value Addition'.
Value Addition, also known as Value Added, is the net contribution made by the firm in the production process. It is calculated by subtracting the value of intermediate goods used from the value of output. Thus, Value Addition = Value of Output - Value of Intermediate Goods. It represents the new value created by the firm and avoids double counting of inputs. For example, if the output value is Rs 100 and intermediate goods are worth Rs 20, then Value Addition = Rs 100 - Rs 20 = Rs 80.
Define 'Worker Population Ratio' and mention its utility.
Utility: It helps us understand how many people in a population are engaged in work compared to the total number of people. It is useful for analysing the employment situation in a country and comparing workforce participation between rural and urban areas or among different groups like men and women.
Justify the following statement
"Full employment is an essential condition to be fulfilled under Keynesian Economics Principles."
According to Keynesian Economics, full employment is essential because the economy's output and income depend on the level of employment. Unlike the classical view which assumed that all willing workers would automatically find jobs, Keynes argued that insufficient demand can cause unemployment. Full employment means that all available labour resources are used, leading to maximum output and income.
If employment is below full employment, it indicates deficient demand in the economy, causing less production and higher unemployment. This lowers aggregate demand further, creating a vicious cycle. Keynes emphasized that government intervention through fiscal policy is necessary to increase demand and achieve full employment.
Therefore, full employment is a key condition for economic stability and growth in Keynesian theory since only then can the economy function efficiently and avoid the problems of unemployment and declining output.
State and discuss any one component of Aggregate Demand in a two-sector economy.
In a two-sector economy consisting of households and firms, one main component of Aggregate Demand is consumption expenditure. Consumption expenditure refers to the total spending by households on goods and services. It is an important part of aggregate demand because households use their income to buy goods and services that satisfy their wants and needs. The level of consumption depends on factors like income, wealth, and expectations about the future. In simple terms, when people earn more income, they tend to spend more, which increases consumption expenditure and thereby raises aggregate demand in the economy. Thus, consumption expenditure drives demand for final goods and services and influences overall economic activity.
"Involuntary Unemployment is a situation where an able bodied person unwilling to work does not get work at the prevailing wage rate." Do you agree with the given statement? Elucidate briefly.
Calculate the Equilibrium level of Income for an imaginary economy, if it is given that :
(a) Consumption function, C = 500 + 0·80 Y where C = Consumption, Y = Income
(b) Autonomous Investments (Io) = < 1,000 crore
Consumption function: C = 500 + 0.80 Y
Autonomous investment, I0 = 1000 crore
We know that at equilibrium level of income, Aggregate Demand (AD) = Income (Y)
Aggregate Demand, AD = Consumption + Investment
AD = C + I0
Substitute C = 500 + 0.80 Y and I0 = 1000
AD = 500 + 0.80 Y + 1000 = 1500 + 0.80 Y
At equilibrium, Y = AD
So, Y = 1500 + 0.80 Y
Y - 0.80 Y = 1500
0.20 Y = 1500
Y = 1500 / 0.20 = 7500 crore
Therefore, the equilibrium level of income is 7500 crore.
Section C
Comparison of GDP (PPP): China’s GDP (PPP) stands at $22.5 trillion, which is significantly larger than India’s $9.03 trillion. This means India’s GDP is about 41% of China’s. This also reflects in income levels, poverty rates, and other socio-economic indicators, where China leads.
Overall, China has maintained rapid growth historically and has a larger economy, while India is catching up with higher recent growth rates and improving indicators.
India and Pakistan initiated their journey of development, nearly at the same time, yet the two economies have travelled different distances." Justify the given statement with valid arguments.
Reasons for Differences:
1. Political Stability: India has experienced relatively more political stability which has helped in consistent policy making. Pakistan has faced political instability which hampered consistent economic growth.
2. Economic Policies: India adopted mixed economy policies with gradual liberalization, focusing on infrastructure and industrial development. Pakistan had reforms but depended heavily on remittances and foreign aid.
3. Agricultural Sector: Pakistan's agriculture sector has shown volatile performance affecting its economy, while India made efforts to improve agricultural productivity.
4. Development Indicators: India improved infrastructure and standard of living steadily. Pakistan’s growth slowed down due to over-dependence on external aid and political factors.
In conclusion, though India and Pakistan began similarly, factors like political stability, economic policies and sectoral performance led to different development outcomes.
Distinguish between Real Gross Domestic Product and Nominal Gross Domestic Product, using a suitable numerical example.
For example, a country produces only bread. In the year 2000, it produced 100 units at Rs 10 each. Nominal GDP in 2000 = 100 * 10 = Rs 1,000. In 2001, it produced 110 units at Rs 15 each. Nominal GDP in 2001 = 110 * 15 = Rs 1,650.
To find Real GDP for 2001 using 2000 prices, Real GDP in 2001 = 110 * 10 = Rs 1,100.
Here the increase in Nominal GDP (from Rs 1,000 to Rs 1,650) is due to both the increase in production and price rise, while Real GDP increase (from Rs 1,000 to Rs 1,100) shows increase in production only.
Thus, Nominal GDP can be distorted by price changes, but Real GDP shows the true growth by eliminating price effects.
Discuss briefly the problem of 'Double Counting', using a suitable example.
The issue arises because intermediate goods used in producing final goods are counted along with the final goods themselves. For example, if we count the value of wheat and also count the value of bread made from that wheat, we are counting the wheat twice. This exaggerates the total value of production.
To avoid double counting, only the value of final goods and services should be counted in GDP. This ensures an accurate measurement of the economy's value without inflating it by including inputs multiple times.
"In a hypothetical economy, planned savings fall short of planned investments, leading to fall in employment and income."
Do you agree with the given statement? Support your answer with a valid explanation.
Yes, I agree with the statement. In an economy, if planned savings fall short of planned investments, it indicates a discrepancy in financial flows. However, according to the Paradox of Thrift, when people try to save more, total aggregate demand falls because less money is spent on consumption. This decrease in aggregate demand leads to a fall in income and employment as firms reduce production due to lower demand. Consequently, even if people want to save more, the overall economy contracts making actual savings fall short of planned investments. So, a shortfall in savings compared to investments can indeed lead to lower employment and income because of reduced aggregate demand and output.
Define Inflationary Gap. State how the government can control the situation of inflationary gap using the taxation policy.
(b) Controlling Inflationary Gap through Taxation Policy: To reduce the inflationary gap, the government can use taxation policy to decrease aggregate demand. By increasing taxes, the government reduces the disposable income of consumers, which lowers consumption spending. This fall in consumption reduces aggregate demand, helping to control inflation. Higher taxes also discourage investment and spending, thus decreasing demand further. Overall, an increase in taxes cools down the economy and narrows the inflationary gap by bringing aggregate demand closer to aggregate supply at the full employment level.
Section D
Step 1: Write the GDP identity for both methods:
GDPfc = GDP at market prices - Net product taxes
Step 2: If GDPfc is given and net product taxes or subsidies are missing, we use the relation:
GDP at market prices = GDPfc + Net product taxes
Step 3: From the Expenditure Method, GDP at market prices = Consumption expenditure + Investment + Government expenditure + (Exports - Imports). If some of these components are missing, use the equation by plugging known values and solving for the missing ones.
Step 4: In the Income Method, GDPfc equals sum of factor incomes like wages, rent, interest, and profit. If some incomes are missing, their values can be found by subtracting known incomes from total GDPfc.
Example: Suppose GDPfc = 370 crore, product taxes = 30 crore, subsidies = 10 crore, then net product taxes = 30 - 10 = 20 crore.
Therefore, GDP at market prices = 370 + 20 = 390 crore.
Using this, fill in missing values by rearranging and solving the equations provided in the question context.
Thus, step by step calculation using the given total GDPfc and known components allows estimation of missing values consistently in both methods.
(i) State the meaning of the following :
(I) Global burden of disease
(II) Mortality Rate
(ii) Discuss briefly, why less women are found in regular salaried employment.
(I) Global Burden of Disease: It refers to the total impact of diseases and health conditions on the population worldwide. It includes the number of deaths, disabilities, and illnesses caused by various diseases, showing how much they affect health and quality of life.
(II) Mortality Rate: It is the number of deaths occurring in a particular population in a given time, usually expressed per 1,000 or 100,000 people. It helps to measure how many people die in relation to the total population.
(ii)
Less women are found in regular salaried employment due to several reasons. First, social factors and traditional roles expect women to handle household responsibilities and child care, which limit their availability for regular jobs. Second, there are fewer educational and skill development opportunities for women in some areas, reducing their chances of getting salaried jobs. Third, workplace environments and policies may not be very supportive for women, leading to fewer women in formal employment. As a result, many women work as self-employed or in casual labor rather than regular salaried positions.
(i) Explain why regular salaried employees are generally more in urban areas than in rural areas.
(ii) State any two main drawbacks of public health care system in India.
(ii) Two main drawbacks of the public health care system in India are: 1. Insufficient infrastructure and resources lead to overcrowded hospitals and long waiting times. 2. Lack of proper maintenance and shortage of doctors and staff reduce the quality of health care services available to the public.
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