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Paper-2
Maximnum Marks: 80
Allowed:
3 Hours
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General Instructions:

This question paper contains two sections:

()
Section-A: Macro Economics
Section-B: Indian Economic Development
(ü)
This paper contains 20 Multiple Choice Type Questions of 1 mark each.
(i) This paper contains 4 Short Answer Type Questions of 3 marks each to be answered in 60 to 80
words.

(io) This paper contains 6 Short Answer Type Questions of 4 marks each to be answered in 80 to 100
words.
(0) This paper contains 4 Long Answer Type Questions of 6 marks each to be answered in 100 to 150
words.

SECTION A- MACROECONOMICS
1 With reference to given diagram, if the economy is at point E and moves to E, which of the following fiscal policies
Could have caused this? 2 Min. U[M] 1]
DAegmrandte Y
(Equilibrium point) E1 -AD,
AS

mosl st G ADe 9io

A1
450
+X
Y Y1
Income and Output
(a) Increase in taxes (b) Reduction in subsidies
(c) Increase in public expenditure (d) Increase in imnports
2
refers to the level of aggregate demand, which can be mnet by the corresponding aggregate supply in the
economy. (Choose the correct option to fill up the blank) 2 Min.R (E) [1]
(a) Autonomous consumnption (b) Effective demand
(c) Excess demand D)oes (d) Deficient demandstste
3. High-powered money includes (Choose the correct option to fill up the blank) 2 Min.R [E) [1]
(a) Cash reserves of banks
(b) Demand deposits with commercial banks
(c) Time deposits with banks osh at()nosl b t)oah br i o e e o ak
(d) Currency held by the public and reserves of commercial banks with RBI noktoll t
, Read the following statements
carefully:
Oatement I: Foreign exchange rate is the rate at which two national currencies are exchanged.
Statement II: Depreciation of domestic currency leads to fall in imports.
ghtof the given statements, choose the correct alternative from the following: 2 Min.U[M) [1]
 BSE SAmple ueatton Papera,
(a) Both statements are corrct. (b) Only statement I is correct.
(c) Only statement ll is correet. (d) Both statements are incorrect.
S. The diagram illustrates the icular low of incomethrough three main plhases, Which of the
following
otly epesents the low of income in an economy?
%ecuence
Iroduction Phase
(Generationof Income)

Income Phase
(Distribution of Income)

Expenditre Phase
(Disposition of Income)

(a) Expenditure Phase ’ Income Phase ’ Production Phase

(b) Producion Phase ’ Income Phase’
(c) Income Phase ’ Expenditure Phase ’ Expernditure Phaseobet
Production Phase yltesitaio og l
(d) Income Phase’ Production Phase ’ Expenditure Phase
6. When Aggregate Demand is greater than Aggregate Supply at
full employment level, the economy faces
(Choose the correct option to fill in the blank)
(a) Defiient demand 2 Min.U(E) [11
(c) Effective demand (b) Excess demand
o(d) Unemployment equilibrium
7. Read both statements carefully:
Staterment I: Domestic income includes net factor income from
abroad.
Statement II: National income is greater than domestic income
In light of the given statements, choose the correct when net factor income from abroad is positive.
alternative from the following:
(a) Both statements are true.
(b) Both statements are false.
2 Min.U(M) 1]
(c) Statement I is true, but Statement II is false.
(d) Statement I is false, but Statement II is true.
8. Match the following items in Column I and
Column II and identify the correct option: R (EI[1]
ColumnI Column II
(A) Commodity money (I) Draft
(B) Near moneybtisO() Rs 500 note
(C) Legal tender money (III) Bonds
(D) Fiduciary money (IV) Gold
Options:
(a) (A) - (1V), (B) - (II), (C) - (I), (D) - (1)
(c) (A)- (I), (B) - (), (C) - (V), (D) - (II) ns (b) (A) -(W), (B) -(V), (C)- (I), (D) - (T)
(d) (A) - (I), (B) - (1), (C) - (1), (D)- (V)
9. Read the following statements: Assertion (A) and
Reason (R). Choose the correct option from those given below:
Assertion (A): Purchase of foreign shares by an Indian is recorded in the
Reason (R): Purchase of assets abroad leads to an inflow of foreign capital account of BoP
exchange.
Options:
(a) Both Assertion (A) and Reason (R) are true, and 2 Min.A[M) [1]
(b) Both Assertion (A) and Reason (R) are true,but Reason (R) is the correct explanation of Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false. Reason (R) is not the correct explanation of Assertion (A).
(d) Assertion (A) is false, but Reason (R) is true.
ollotsrlbesH
10. When the central bank sells government
securities in the open market, it leads to 2 Min. U[E [1]
(Choose the correct option to fill up the blank)
 Papers 37
Increasein liquidity Bample Question

No
effect onliquidity (b) Decreane in liquidity
(c) net value added at factor cost (d) Inerease in government spending
[Link] fronn the following data:
Particulars
S N o ,

Durable-use producer goods with a life ( in crores)

()
span of 10 years
(i)
Single-use producer goods
Sales
(ùi)
Unsold output prOduced during a ycar 20
(iv)
Taxes on production 2

12.(a) The economy is operating at a level of income below full employment equilibrium.
the Hkely impact of this situation on
Analyse
employment levels and aggregate demand. GMinA IMI[31
OR
(b) Explain the concept of "involuntary unemployment." How does the Keynesian theory of income and
enploymentt provide a solution to this problem?
13.(a) "GDPat onstant prices is often considered a better measure of economic growth than GDP at current príces.
agree?? Justify your answer.
Do you GMinA [MI ai, 14]
OR
(b) Arjun, an Tndian citizen, has been working in the US for two years and sends part of his income to his parents
India. His brother Ramesh works in India for an American firm
in and receives salaryy in rupees.
Whose income (Arjun orRamesh) will be
) included in India's national income?
i) What is the
basisis of
of distinguishing domestic income Explain why.
from national income?
14. How do autonomous transactions differ from accommodating transactions in BoP? Why are accommodating items
l despite not representing actual trade or investment?
essential
7 Min. U [M] [4]
46 Refer to the given image carefully:lt
RBI
Banks
Repo Rate t

Reverse Repo Rate

With reference to the diagram, explain the concepts of Repo Rate and
Bank of India (RBI) use these tools to control inflation and Reverse Repo Rate. How does the Reserve
liquidity in the economy? 7 Min. U[(M) [4)
16. (a) (i) The value of marginal propensity to consume is 0.6 and initial income in the
aschedule showing Income, Consumption and Saving, taking autonomous economy is 100 crores. Prepare
show the equilibrium level of income by assuming autonomous investment of consumption
60 crores.
as 40 crores. Also,
(41
(ü) What is aggregate supply? Explain the two components of aggregate supply.
ORn0
12 Min. Ap +A(D] m[2)
(b) "In a two-sector economy, the equilibrium output is achieved when Aggregate Demand equals
Supply." Justify the statement with the help of a diagram. Aggregate
(4]
Also, analyse the effect of an increase in Marginal Propensity to Consume (MPC) on the equilibrium
output. level of
[2)
17. Refer to the given text
carefully:
Ihe Government of India presents the Union Budget every year with multiple macroeconomic goals in mind.
One ofthe key objectives is resource allocation directing funds to priority sectors like infrastructure, education
dna health. Another is redistribution of income, achieved through progressive taxation and welfare schemes like
nyushman Bharat and PM Garib Kalyan Yojana. Additionally, the budget is a tool for economic stability, where
tureand taxation are adjusted to control inflation or boost demand during a slowdown.
ne 2024-25 Budget, while increased spending on capital projects aimed at long-term growth, it also raised
Lerns about the rising fiscal deficit, estimated at 6.1% of GDP The revenue deficit remained significant as
 Crittcs warned of a potential crowding-out
revenue expenditures exeded revenue reccipts.
increased govemment borrowing might limit privatesector investments.
However, the
and ensure inclusive growth.
government e{iecl, whe
eansionary fiscal stance, citing the need to revive demand
(a) ldentify and explain any two objectives of the
government budget discussed in the pass8age. detended
answer with examples from the case.
negatively impact the economy, as
10 Min, Support yon
(b)What is a fiscal deicit? How might a high fiscal
study?
deficit
mentioned in the ca
2
SECTION B- INDIAN ECONOMICDEVELOPMENT
18. Read the text carefully and choose the correct option: 2 Min.
a result, Indian
Pst-1991, India opened its economy to foreign trade and investment. As businesses
competition and consumers gained acess to awider variety of [Link] gnihsogo a faced global
Which neform allowed Indian businesses to trade freely across borders?uie zitt to aBgnat yl
(a) Liberalisation (b) Privatisation (c) Globalisation (d) Nationalisation
19. During the colonial rule, India became a net of raw materials and a net of finished
the correct option to fll up the blank) Sorg 2irli o rotoloa c sbivone goods.
2 n. (Choose
(2) Importer, Exporter (b) Exporter, Importer (c) Seller, Buyer (d) Consumer, MiProducer
20. The Sarva Shiksha Abhiyan (SSA) was launched to - (Choose the correct option to fill up
the
2 MinR blank
(a) Provide vocational training to engineers (b) Provide universal elementary education (E1 [21
(c) Encourage foreign investment in education (d) Promote higher education in urban areaso
21. Read the following statements: Assertion (A) and Reason (R).Choose the correct option from those given bt
Assertion (A): Rural credit plays acrucial role in enhancing agricultural productivityotid att S
Reason (R):Most rural households are able to finance agricultural activities from their own savings.
Options: 2 Min.A[M]
(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A)
(6) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A) 2
(c) Assertion (A) is true, but Reason (R) is false.
(d) Assertion (A) is false, butReason (R) is [Link]
22. Ifa country'sGDP rises without aproportional increase in employment, it leads to growth. (Choose the
correct option to fillup the blank) but Statement 2Min. U [E] [1]
(a) Jobless (b) InclusivecSoa () Productive (d) Disguised
23. The following are Assertion (A) and Reason(R). Choose the correct option:
Assertion (A): The goal of equitable distribution of land was fully served by the abolition of intermediaries in the
post-independence India.
Reason (R): Big landlords challenged the land ceiling legislation, delaying the implementation and subsequently
escaping rom the [Link] sotnllc kososolelcel ossrt seu (18S)2Min.)A IMIJ
(a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A)and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true, but Reason (k) 1s [Link] ioee yd sroo3r1ilo lovsl uidiiipe 9s worle
(d) Assertion (A) is false, but Reason (R) is true. elnsnoanoe
24. What is meant by carrying capacity in thecontext of the environment? 2 Min. U[E)[1]
(a) The level of population that can be supported with unlimited resources.
(b) The level of industrial growth a country can achieve in a decade. iteul'xggue
(c) The maximum level of resource use that the environment can support without degradation.
(d) The total economicoutput a country can produce using its natural resources.
25. From the set of terms given in Column I and Column I, choose the correct pair: 2 Min. R (E) [11
Column I t oi ColumnI I t 9 0 hon
(A) Agricultural Diversification (1) Long-term income with ecological balance
(B) Micro Credit (i)Small loans without collateral
activitiesuiibnsqa
(C) Sustainable Livelihood (i)Shift from crop farming to allied
(D) Rural Infrastructure (iv)Process of agricultural marketing
 Papers | 39
Bample Quetton

(b) (®) -()

O p t i o n s :

( ) ( 4 ) - ( 0 )

(e) (C)- () (d) ()- 6v)

(Choose the
institution
responsible tor announcing Minimum Aupport Prlcee (MS) in India is he
The
optionto fill up the
blank)
26. o

t
a) National
r e

Bank for Agriculture and Rural Development (NABARD)

t

Rod Corporation of India (PC)

for Agricultural Costs and Phees (CAC)
C o m m i s s i o n

i) Institution for Transforming India

(d)
National
(NITI Aayog)
the following statements carefully:
Read
17. S t a t e m e n t China'sshift from a centrally planned ecoonomy to a market-oriented one was gradual ard begar
I:
agriculture.
th refornns in control in trade
Statement
l : India's liberalisation reforms in 1991 immediately abolished allforms of fgovernment

U M1
a n dinvestment.

fthe given statements, choose

Inlight oft the correct alternative from the following 2 Min
Both the statements are true. (b) Both the statements are false.
Statement I is false.
(a)
Statement Iis true, but Statement Il is false. (d) Statement II is true, but
ic) reforns."
Despite alate start, China's growth rate surpassed both India and Pakistan due to its strong policy
GMin. A+E [MI
[3J
28.
agree with the statement? Justify your answer with valid arguments.
Do you
Highneconomic growth always leads to environmental degradation." GMin [MI (31
29.(a) his statement with valid arguments in favour of sustainable growth.
OR
ACasualisation of employment is becomingincreasinglycommon in India."
main reasons behind this trend?
Dalain the meaning of casualisation. What are the two
occupational structure.
30.(a)
Discuss s briefly anytwo salient features of India's s pre-independence Z Min.U+A
[M] [41

OR 3 elaborate
complexities of the industrial sector in India on the eve of independence,
6 n order to understand the de-industrialisation" and technological backwardness.
conditions that contributed to "systematic
on the prevailing A [MI [4]
reasons: 8 Min.
data of India and China, with valid
21, Compare and analyse the given Gender Ratio (Per
thousand males)
Annual Growth Rate of Population (2015)
Country 929
lisb 1.2%
India 941
0.5%
China
Environment.
interrelationship between Economy, Society and
32, The image illustrates the

Economy

Society
Enyironmnent
development. 7Min. UAIMI[2)
sustainable
significance of this diagram in the context of
(a) Interpret the forms the outermost layer in the
diagram.
environment finances.
(b) Explain why the new technology, they are huge
burden on government
encourage farmers to use
9, (a) (i) While subsidies subsidies in the light of this fact. sufficient food grains to
build
Discuss the usefulness of government to procure
enabled the 12 Min.
that green revolution
() Explain the statement during times of shortage.
its stock that can be used OR
 (b) (i) "Under the liberalisation measures taken by the Government of India, Trade and Investment
were extremely crucial". Reject or support the given statement with valid arguments, Policy reforms
(üi) Defendor refute the following statennent with valid arguments:
"New EconomicPolicy 1991 altered the role of Reserve Bank of lndia (RBI) in the economy".e
34. Read the followìng text caretully: 131
India, with a population of over 1.4 billion, holds inmmense potential in terms of human resources.
potential depends largely on how effectively the country invests in education and health -the two
human capital formation. Hunan capital refers to the stock of skill, ability, expertise and knowledge
RRealising
core pillarsthiofs
the people. Investment in hunman capital is essential for enhancing productivity and fostering
While schemes ike Sarva Shiksha Abhiyan, Mid-Day Meal Scheme, Rashtriya Madhyamik Shiksha
embodied
economic growth,in
the National Health Mission have brought notable improvements, stark regional and social
Governnment spending on education has hovered around 4% of GDP which is disparitiesAbhiyan,
and
significantly lower remain.
than the
recommended 6% by various comnmittees, including the Kothari Commission.
In rural areas, issues like teacher absenteeism, inadequate physical
infrastructure,
digital connectivity hamper learning outcomes. In urban regions, although facilities multi-grade teaching
are relatively better, and poor
in private institutions and the pressure of entrance exams
sections. The quality of education alsO remains a concern dueoften
,high
marginalise students from economically west fees
tooutdated curricula and lack of vocational traini
Similarly, in the health sector, public expenditure remains low-around 2%
expenses for individuals. Primary healthcare services of GDP leading to high out-of_pocka
remote areas. Preventive healthcare and nutrition, are often understaffed and ill-equipped, particularly i
especially for children and
Malnutrition, high infant and maternal mortality rates and thehe prevalence of mothers, require urgent attention
impact the well-being of the population. communicable diseases continue fo
The demographic dividend can only be
skilled. However, the growing skill gaprealised
and
if the working-age population is healthy, educated
lack and adequately
of employable education pose serious challenges.
lHke Skill India Mission, Atal Innovation Mission and Programmes
Digital India are steps in the rightdirection but need better
implementation and monitoring.
Therefore, India stands at a critical juncture. If it invests
spending, equitable access and quality improvements in both wisely in human capitalthrough increased public
population into a powerhouse of economic growth. education and health-it can transform its vast
Otherwise,
demographic liability, straining the nation'sresources and social the demographic opportunity may turn into
(a) Why investment in education and health is stability. rbssau 10-12 Min. A+E D
answer with examples from the case study. considered essential for human capital formation? Support your
BiiD brs Bibni io risb novig
by the education sector in rural aris
(b)Identify and explain two major challenges faced 92visns bnstsqmoD4
study. areas, as mentioned in the case
(c) The Government of India spends [2
around 4% of GDP on education, despite
6%. Why is this gap significant for human capital recommendations to increase it to
development?

Aerit