SOLUTIONS
2024 BOARD EXAM
CBSE CLASS 12-HUMANITIES ECONOMICS Board Paper 2024 — Set 2
2024
ECONOMICS
CLASS 12-HUMANITIES
CBSE EXAMINATION PAPER-2024
ECONOMICS
(Solved)
General Instructions :
Read the following instructions carefully and follow them :
- This question paper contains 34 questions. All questions are compulsory.
- This question paper is divided into 5 sections.
- Section A – questions number 1 to 2 are case based questions
- Section B – questions number 3 to 17 are multiple choice questions
- Section C – questions number 18 to 23 are short answer type i
- Section D – questions number 24 to 31 are short answer type ii
- Section E – questions number 32 to 34 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 :
India s industrial policy since independence has been shaped broadly in terms of the Industrial Policy Resolution of 1948. It emphasized on the sole responsibility of the government in the matter of promoting, assisting and regulating the development of industries in the national interest. It envisaged an active and dominant role of public sector.
The next Industrial Policy Resolution was placed before the Parliament by the Prime Minister on 30th April, 1956. It suggested that, There is a need for adoption of the socialist pattern of economy as the national objective, along with the need for planned and rapid development. It required that all industries of basic and strategic importance, or in public utility services, should be in the public sector.
Other industries which are essential and require investment on a massive scale (which only the State could provide) have also to be in the public sector. Thus, the State has to assume direct responsibility for the future development of industries.
This Resolution classifies industries into three categories :
• The first category given in Schedule A, consists of industries the future development of which will be the exclusive responsibility of the State.
• In the second category given in Schedule B, are industries which will be progressively State-owned. However, in them, private enterprise will also be expected to participate.
• The third category comprises all the remaining industries, the further development of which will be left to the initiative and enterprise of the private sector.
On the basis of the given text and common understanding, answer the following questions .
(1) Outline and discuss the classification of industries into various categories as per Industrial Policy Resolution, 1956
(2) The Government of India, in the initial years of economic development, emphasized on a greater role of the public sector in the industrial development. Justify the statement, giving reasons in support of your answer
Read the following text carefully :
Decisions taken by factors of production in the production process often may affect the stakeholders indirectly. Such impacts at times are huge but are not accounted for, while estimating national income. Economists call them as externalities and they can be positive or negative.
In this regard, many economists suggest carbon pricing as an important tool to ensure ecological balance.
Carbon pricing tries to control greenhouse gas emissions by either placing a fee on emitting or offering subsidies on lesser emission. Through instruments like carbon tax, green cess, eco tax, etc. economists suggest moving towards greener technology eliminating such negative externalities.
On the basis of the given text and common understanding, answer the following questions :
(1) Define externalities.
(2) Differentiate between positive and negative externalities.
(3) Elaborate how and why carbon pricing should be promoted.
Section B
Read the following statements carefully:
Statement 1: A consumption function describes the relationship between consumption and savings.
Statement 2: Consumption function consists of two components autonomous consumption and induced consumption.
In the light of the given statements, choose the correct alternative from the following:
Identify which of the following will appear on the debit side in the Capital Account of India of Balance Payments.
Suppose in an imaginary economy, autonomous consumption = ₹ 500 crore and marginal propensity to consume = 0.8. The saving function for the economy would be ___________.
(Choose the correct alternative to fill in the blank)
Identify the incorrect statement with reference to Cash Reserve Ratio (CRR):
The incorrect statement is 'It is not binding on the commercial banks.' This is false because the CRR is a mandatory requirement set by the Central Bank that all commercial banks must adhere to, ensuring they maintain a certain percentage of their demand and time deposits as cash reserves.
During the British rule, India's foreign trade had various features except ________________. (Choose the correct alternative to fill in the blank)
The correct answer is 'Free trade from India to the rest of the world'. During British rule, India's trade was characterized by restrictive policies set by the British, leading to controlled exports and imports to benefit British interests over Indian economy. There was no true free trade, as trade practices were heavily regulated.
China was able to control its rapid population growth rate owing to ________________.
(Choose the correct alternative to fill in the blank)
Modernization is an important economic planning objective that focuseson _______________.
(Choose the correct alternative to fill in the blank)
(i) Adoption of innovative technology
(ii) Equal distribution of income and wealth
(iii) Bringing positive changes in the social outlook
Alternatives :
The present day rapid industrial growth in China can be traced back to the economic reforms introduced in 1978, where _______________.
(Choose the correct alternative to fill in the blank)
(i) initially reforms were initiated in agriculture, foreign trade and investment sectors
(ii) the policy of dual pricing was adopted
(iii) the Government revoked the policy of Special Economic Zones
Alternatives :
____________ farming is a system that is helpful in restoring, maintaining and enhancing the ecological balance.
(Choose the correct alternative to fill in the blank)
Read the following statements carefully :
Statement 1 : India, Pakistan and China have similar physical endowments, but totally different political systems.
Statement 2 : Both India and Pakistan laid great emphasis on creating a large private sector.
In the light of the given statements, choose the correct alternative from the following :
Identify the sources of Human Capital Formation and choose the correct alternative to fill in the blanks.
Alternatives :
From the type of workers given in Column I, identify the correct nature of work in Column II :
Alternatives :
After the implementation of economic reforms, Pakistan experienced slowdown of growth due to various reasons including _____________.
(Choose the correct alternative to fill in the blank) 1
(i) Volatile performance of the agriculture sector
(ii) Over-dependence on remittances from abroad
(iii) Political instability
Alternatives :
Read the following statements : Assertion (A) and Reason (R). Choose the correct alternative from those given below :
Assertion (A) : In the recent past, Indian economy has been facing the problem of jobless growth.
Reason (R) : Jobless growth refers to a situation where an economy is able to produce more goods and services without generating additional employment.
Alternatives :
Section C
"The Government of India has taken various measures to align the agricultural marketing system with the growing production activities in the rural areas".
Do you agree with the given statement ? Give any two valid in support of your answer.
Self- Help Groups provide stimulus to socio-economic development in rural areas.
Justify the given statement with valid explanation.
Firstly, SHGs empower rural poor, especially women, by providing them access to credit at lower interest rates compared to informal lenders.
Secondly, SHGs encourage savings habits among members leading to financial security.
Thirdly, they promote skill development and generate supplementary employment opportunities which help raise income levels.
Moreover, SHGs create a platform for social awareness, cooperation and collective decision-making, improving the overall social fabric.
Thus, SHGs help overcome poverty and improve living standards, contributing significantly to rural development.
Interpret the given picture and explain any one strategy to control it from becoming an ecological disaster.
Strategy to Control: One effective strategy to control this pollution is to treat industrial and domestic wastewater before releasing it into the river. This can be done by setting up proper sewage treatment plants and enforcing strict regulations on factories to reduce harmful effluents. By doing so, we prevent harmful chemicals and waste from entering the river, protecting the aquatic ecosystem and the communities depending on it. Hence, treated water ensures cleaner rivers and prevents ecological disasters.
"Depreciation of currency may promote exports of a nation." Defend or refute the given statement with valid arguments.
Depreciation means a fall in the value of the domestic currency relative to foreign currencies. When the domestic currency depreciates, Indian goods become cheaper for foreign buyers because they need to pay less foreign currency to buy the same amount of goods. This encourages foreign consumers to buy more Indian exports, increasing the demand for Indian goods abroad.
However, depreciation also increases the cost of imported goods, which may lead to higher production costs for exporters using imported inputs. Also, if foreign income is low or there are trade restrictions, depreciation may not significantly increase exports.
In general, depreciation tends to promote exports as Indian products become more competitive worldwide. But the actual impact depends on factors like demand abroad, cost of imports, and trade policies. So, the statement is generally true but with conditions.
Conclusion: Depreciation of the domestic currency usually promotes exports by making goods cheaper internationally, helping the nation earn more foreign exchange and improve its trade balance.
On the basis of the data given below, estimate the value of Gross National Product at Factor Cost (GNPFC) :
GNP at Market Price (GNPMP) = GDP at Market Price (GD PMP) + Net Factor Income from Abroad (NFIA).
Step 2: To get GNP at Factor Cost (GNPFC), subtract Net Indirect Taxes (NIT) from GNP at Market Price.
So, GNPFC = GNPMP - Net Indirect Taxes.
Step 3: Given the data, first calculate GNPMP by adding GDPMP and NFIA.
Step 4: Then subtract the given Net Indirect Taxes to get GNPFC.
Note: Net Indirect Taxes = Product Taxes - Subsidies.
Therefore, by applying these calculations on the given data, we estimate the value of GNPFC.
This value represents the total income earned by factors of production of a country including net income from abroad, adjusted for taxes and subsidies.
Accommodating transactions are undertaken to maintain stability in the Balance of Payments Account".
Justify the given statement with valid explanation.
These transactions balance the accounts after the autonomous transactions (trade in goods, services, investment) have been accounted for.
In other words, accommodating transactions help to restore equilibrium by offsetting the deficit or surplus in the current and capital accounts.
Hence, they play a critical role in sustaining a country’s economic stability and international financial credibility by ensuring the BoP does not collapse.
Therefore, the statement is justified as accommodating transactions act as a safety valve to keep the BoP account stable despite temporary imbalances.
Section D
Multiplier = 1 / (1 - MPC) = 1 / (1 - 0.8) = 1 / 0.2 = 5
This means every 1 crore of government spending increases total income by 5 crore.
Therefore, the total increase in income = Multiplier * Increase in government spending = 5 * 10,000 crore = 50,000 crore.
Next, the increase in consumption expenditure is given by MPC times the increase in income:
Increase in consumption = MPC * Increase in income = 0.8 * 50,000 crore = 40,000 crore.
Conclusion:
The increase in income in the economy is 50,000 crore and the corresponding increase in consumption expenditure is 40,000 crore.
If actual demand for final goods falls short of the actual output of final goods corresponding to full employment level, it may lead to an unintended accumulation of inventories.
Do you agree with the given statement? Give valid reasons in support of your answer.
Yes, I agree with the given statement. When actual demand for final goods is less than the output produced at full employment, it creates a situation where goods remain unsold. Producers expect to sell all their output, but due to low demand, the unsold goods accumulate as inventories in warehouses. This accumulation is unintended because firms planned production based on higher demand. Such unplanned inventory buildup indicates that supply exceeds demand, often causing firms to reduce production in the future to restore equilibrium. For example, if a shirt manufacturing firm produces 1000 shirts assuming full demand, but only 800 are sold, 200 shirts will remain as unsold stock, leading to unintended inventory accumulation. Hence, a mismatch between output and demand leads to unplanned inventory increases.
Discuss any two factors that lead to stagnating Indian agriculture sector during British rule.
1. Land Revenue Systems: The British introduced systems like Zamindari and Ryotwari where high taxes were imposed on farmers. This forced many farmers to remain in poverty and discouraged investment in land improvement. Many small farmers lost their land due to inability to pay taxes.
2. Lack of Technological Progress: During British rule, agriculture remained traditional with little or no mechanization. Farmers used animal power instead of machines, and there was no significant development in irrigation or modern tools. This limited productivity and kept agriculture stagnant.
Discuss any two liberalization measures pertaining to the tax reforms, introduced by the government, during the economic reform process of 1991.
(a) Reduction in Tax Rates: The government reduced the high rates of income tax and corporate tax to encourage more investment and economic activity. This helped in widening the tax base and improving compliance.
(b) Simplification of Tax Structure: The tax system was simplified by reducing the number of tax slabs and exemptions. This made tax administration easier and minimized tax evasion, improving revenue collection and transparency in the economy.
There exists a positive correlation between human capital formation and economic growth of nation .
Justify the given statement with valid explanation.
Firstly, an educated labour force can adopt new technologies easily, which increases efficiency and output.
Secondly, healthy people can work longer and contribute more to production.
Thirdly, human capital leads to better decision making and entrepreneurship, fostering economic development.
Though sometimes the exact measurement of its impact is difficult, in general, countries with higher human capital levels experience faster economic growth due to improved labour quality and innovation.
Thus, investing in human capital formation is essential for a nation to achieve sustained economic growth and development.
On the basis of the data given below, discuss the shift in output and employment sector-wise, in India and China :
Source : Human Development Report 2019 : Key Indicators of Asia and Pacific, 2019
In India and China, there has been a clear shift from agriculture to industry and service sectors in terms of output from 1980 to 2018. Agriculture's contribution to Gross Value Added (GVA) has decreased, while industry and especially the service sector have grown significantly. China showed a remarkable increase in industrial output, reflecting rapid industrialization, whereas India saw a strong growth in the service sector.
Shift in Employment Sector-wise:
Employment in agriculture has declined in both countries as people moved to other sectors. In India, a large portion of the workforce remains in agriculture but its share is decreasing slowly. In contrast, China shows a faster decline in agricultural employment and a growing workforce in industry and services. This indicates that China has industrialized and urbanized more rapidly than India.
The data indicates that both countries are transitioning from traditional agricultural economies towards modern industrial and service-oriented economies, but the pace and balance differ, with China ahead in industrial growth and employment shift and India excelling in services.
This structural change is important because it shows economic development and better job opportunities beyond farming, improving living standards in both nations.
Reserve Bank of India undertakes the important function of managing the government s banking transactions.
Discuss the above stated function performed by the Reserve Bank of India.
The Reserve Bank of India (RBI) acts as the banker to the government by managing its banking transactions. This includes receiving money on behalf of the government, making payments from the government account, and managing public debt. RBI also provides short-term and long-term loans to the government when needed by issuing government securities like bonds and treasury bills. It helps the government in managing its receipts and payments efficiently and maintains the government’s accounts. Moreover, RBI facilitates smooth functioning of government’s monetary operations and acts as an agent to collect taxes and other revenues on behalf of the government. This role helps the government in raising funds for development activities and financial stability of the economy.
Complete the following table. Construct the consumption function at ₹ 200 crore level of income.
At income level Y = 200 crore:
Consumption, C = 100 + 0.8 * 200 = 100 + 160 = ₹ 260 crore.
Below is the completed table:
Income (Y) crore | Consumption (C) crore
0 | 100
50 | 100 + 0.8*50 = 100 + 40 = 140
100 | 100 + 0.8*100 = 100 + 80 = 180
150 | 100 + 0.8*150 = 100 + 120 = 220
200 | 260
The consumption function shows that even if income is zero, there is an autonomous consumption of ₹ 100 crore. For every additional ₹ 1 crore increase in income, consumption increases by ₹ 0.8 crore, which is the marginal propensity to consume (MPC).
Section E
(i) The participation rate of people in economic activities in rural areas is more than that in urban areas.
Justify the given statement.
(ii) Define disguised unemployment. State its implications on output and employment in a country.
(ii) Disguised unemployment is a situation where more people are engaged in work than actually required for a particular job, but their contribution is not reflected in increasing output. For example, if a farm requires only two workers but five are working, the extra workers are considered disguised unemployed.
Implications: It leads to low productivity as workers share limited work among themselves, reducing overall efficiency. It also means the country is not utilizing its human resources properly, resulting in lower output and hindering economic development.
(i) "Amita is a regular worker in a private firm that employs twelve hired workers."
Is she working in the formal/informal sector? Give valid reasons in support of your answer.
(ii) State any two sources of data on unemployment in India.
(iii) Elaborate the need to promote women's education in India.
Amita is working in the informal sector because the private firm employs less than 10 workers, which usually indicates informal sector according to government classification. Informal sector workers typically lack job security, social security benefits, and regular wages even if they work regularly. Since Amita is working in a private firm with only twelve hired workers, it is likely a small enterprise and does not provide formal sector benefits.
(ii) Two Sources of Data on Unemployment in India:
1. Reports of Census of India
2. Annual Reports of Periodic Labour Force Survey published by the National Statistical Office
(iii) Need to Promote Women's Education in India:
Promoting women's education is crucial for empowering women to participate fully in social, economic, and political life. Educated women tend to have better employment opportunities and higher incomes, which help improve family welfare. Women's education leads to better health and nutrition for themselves and their children, reducing infant and maternal mortality rates. Educated women can contribute to the country's development by promoting gender equality and reducing poverty. Hence, promoting women's education can build a more inclusive and progressive society.
(i) Distinguish between direct tax and indirect tax with the help of suitable examples.
(ii) Explain the redistribution of income objective of the Government Budget.
Direct tax is a tax that is paid directly to the government by the person on whom it is imposed, like income tax paid by individuals or corporate tax by companies. Indirect tax is a tax levied on goods and services and is paid indirectly by the consumer when purchasing goods, such as GST or excise duty.
Example of direct tax: Income tax, property tax.
Example of indirect tax: GST, customs duty.
(ii) Redistribution of Income Objective of Government Budget:
The government budget aims to reduce economic inequality by redistributing income. This is done through progressive taxation where higher income individuals pay a higher rate of tax, and the collected revenue is used for welfare programs benefiting lower income groups. It helps in minimizing the gap between rich and poor by transferring resources from wealthy sections to the disadvantaged. This function ensures balanced economic growth and social justice.
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