Uttam Academy || Eros garden- Surajkund - 9311 7788 07

Assignment -01
ECONOMICS
Time : 3 hrs Max. Marks : 80
General Instructions
[Link] assignment contains two sections; Section-A Macroeconomics, Section-B Indian Economic
Development.
[Link] Nos. 1-10 and 18-27 are Multiple Choice Questions of 1 mark each.
[Link] Nos. 11-12 and 28-29 are Short Answer Type Questions of 3 marks each to be answered in 60 to
80 words.
[Link] Nos. 13-15 and 30-32 are Short Answer Type Questions of 4 marks each to be answered in 80 to
100 words.
[Link] Nos. 16-17 and 33-34 are Long Answer Type Questions of 6 marks each to be answered in 100 to
150 words.
Section-A (Macroeconomics)
[Link] difference between narrow money and broad money is ….. . (1)
(a)coins and currency(b) only currency
(c)saving deposits of banks(d) time deposits with banks
Ans. (d) time deposits with hanks
[Link] foreign exchange rate between Indian Rupee and US dollar is Rs. 40/1$and it changes to Rs. 50/1$.
Which of the following is the reason of depreciation of Indian currency?(1)
(a)Increase in demand of US dollar and decrease in supply of US dollar
(b)Increase in both demand and supply of US dollar
(c)Increase in supply of US dollar and decrease in demand of US dollar
(d)Decrease in both demand and supply of US dollar
Ans. (a) Increase in demand of US dollar and decrease in supply of US dollar
[Link] I The medium term target for Consumer Price Inflation (CPI) maintained by the RBI in context of
the Indian economy falls within the band of3% ±2%.
Statement II When C function shoots from Y-axis, it indicates two arguments i.e. saving is negative when
income is zero; and consumption is positive when income is zero.
In the light of the given statements, choose the correct alternative from the following (1)
(a)Statement I is true and Statement II is false
(b)Statement I is false and Statement II is true
(c)Both statements are true
(d)Both statements are false
Ans. (b) The Monetary Policy Committee (MPC) of the RBI has maintained a threshold inflation target of 4%
±2% for the Indian economy.
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[Link] I Profits received from investments abroad is recorded in the capital account.
Statement II Import of machines is recorded in the current account.(1)
In the light of the given statements, choose the alternative from the following
(a)Statement I is true and Statement II if false
(b)Statement I is false and Statement II is true
(c)Both statements are true
(d)Both statements are false
Ans. (b) Profit received from investments abroad affect neither the assets nor the liabilities of a country or its
residents. Therefore it is recorded in current account.
[Link] the given figure carefully andchoose the correct pair from the alternatives given below(1)

(a)Flow, Stock
(b)Stock, Flow
(c)Flow, Flow
(d)Stock, Stock
Or Statement I Purchase of machinery by a producer is an intermediate good.
Statement II Durable goods are used-up in a single act of consumption.
In the light of the given statements, choose the correct alternative from the following
(a)Statement I is true and Statement II is false
(b)Statement I is false and Statement II is true
(c)Both statements are true
(d)Both statements are false
Ans. (a) Flow, Stock
Or (d) Purchase of machinery by a producer is a capital good, while durable goods can be used for many years
e.g. Car, T.V. etc.
[Link] value of Aggregate Demand at an income level of Rs. 300 crore from the given data pertaining to an
economy equals …… . (1)
Savings function S = -10 + 0.20Y Planned investment = Rs. 100 crore
(a)Rs. 150 crore
(b)Rs. 250 crore
(c)Rs. 350 crore
(d)Rs. 450 crore
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Or What will happen, when AS < AD?

(a)To clear unwanted stocks, the producers would plan a cut down in production
(b)To rebuild the desire stocks, the producers would plan greater production
(c)The producers would plan same level of production
(d)Both (a) and (c)
Ans. (c) We know AD = C + I
AD = 10 + (1- 0.20)(300) + 100
AD = 10+ (0.80) (300) + 100
AD =10+ 340
AD = Rs. 300 crore
Or (b) When AS is less than AD, flow of goods and services in the economy tends to be less than their
demand. As a result, the existing stocks of the producers would be sold out. Producers would plan greater
production to meet excess demand.
7. Which of the following statements do not support with the function of RBI as supervisor to the commercial
banks? (1)
(a)Regulates the expansion, merger, acquisition etc. of the bank.
(b)Formulates all rules and regulations for commercial bank,
(c)Extend loans to the commercial bank.
(d)Inspection of operations of banks.
Ans. (a) Regulates the expansion, merger, acquisition etc. of the bank.
8. Suppose in a hypothetical economy, the income rises from Rs. 5,000 crore to Rs. 6,000 crore. As a result,
the consumption expenditure rises from Rs. 4,000 crore to Rs. 4,600 crore. Marginal propensity toconsume in
such a case would be ….. (1)
(a) 0.8(b) 0.4
(c) 0.2(d) 0.6
Or If Marginal Propensity to Save (MPS) is 0.25 and initial change in investment is Rs. 250 crores, then the
final change inincome would be ….. .
(a) Rs. 1,000 crore(b) Rs. 1,200 crore
(c) Rs. 500 crore(d) Rs. 3,500 crore
Change∈Consumption 600
Ans. (d) MPC = = = 0.6
Change∈ Income 1,000

⇒4
1 1
Or (a) K = ⇒
MPS 0.25

⇒ ∆Y =Rs. 1,000 crore

∆Y ∆Y
Also, K = ⇒4 =
∆I 250
9. Assertion (A) Managed floating exchange rate system is an amalgamation of fixed exchange rate and
flexible exchange rate. Reason (R) Central bank can manipulate the flexible exchange rate system.(1)
Alternatives
(a)Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
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(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 (R) is false
(d)Assertion (A) is false, but Reason (R) is true
Ans. (c) Under flexible exchange rate system, exchange rate is determined by the market forces of demand
and supply with no intervention of the Central Bank.
[Link] (A) Fiscal policy focuses on both the principles of economic growth and stability.
Reason (R) Stability is achieved by correcting the situation of inflationary and deflationary gap, while growth is
achieved by way of lower taxation and higher subsidies to the producers.(1)
Alternatives
(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 (R) is false
(d)Assertion (A) is false, but Reason (R) is true
Ans. (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
[Link] ‘Gross National Product atFactor Cost’ (GNPFC) from the following data by expenditure method(3)

Items Rs. (in crores)

Private final consumption expenditure 1,000

Net domestic capital formation 200

Profits 400

Compensation of employees 800

Rent 250

Government final consumption expenditure 500

Consumption of fixed capital 60

Interest 150

Net current transfers from rest of the world (-) 80

Net factor income from abroad (-)10

Net exports (-) 20

Net indirect taxes 80

Ans. Expenditure Method

Gross Domestic Product at Market Price (GDPMP)
= Private Final Consumption Expenditure + Government Final Consumption Expenditure + Gross Domestic
Capital Formation + Net Exports
= 1,000+ 500+ (200+ 60)+ (-20)
= 1,000+ 500+ 260 - 20 = Rs. 1,740 crore
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Gross National Product'at Factor Cost (GNPFC)
= GDPMP - Net Indirect Taxes+ Net Factor Income from Abroad (NFIA)
= 1,740-80 + (-10) =1,740 – 90
= Rs. 1,650 crore
[Link] any three sources of demand forforeign exchange.(3)
Or What is Balance of Payments? Give meanings of trade balance and current account balance.
Ans. The three sources of demand for foreign exchange are described below
(i)Purchase of Foreign Goods by Domestic Residents To purchase of foreign goods domestic residents
need foreign exchange. So, this results in demand for foreign exchange,
(ii)Re-payments of International Loans International loans have to be paid back in foreign exchange, so, this
also results in demand for foreign exchange.
(iii)Tourism to Abroad When Indian tourists visit abroad, they need foreign exchange to meet their expenses
related to boarding and lodging. So, they demand foreign exchange.
Or Balance of Payments BoP of a country is a systematic record of all the economic transactions between the
residents and non-residents of a country during an accounting year.
Trade Balance The difference between export and import of goods, i.e. only the visible items of economic
transactions is termed as Balance of Trade.
Balance of Trade = Export of Goods - Import ofGoods
Current Account Balance Current account is that account of BoP, which records exports and imports of
visible and invisible items and unilateral transfers.
[Link] the formula,
1
K=
MPS
Where K = Investment Multiplier
MPS = Marginal Propensity to Save (4) Ans. We know that,

Ans .
∆Y
K=
ΔI
Where, K = Investment Multiplier
∆Y = Change in Income
ΔI = Change in Investment
Also, ΔY = ∆C + ΔI [∆C = Change in Consumption]
⇒ ΔI = ΔY-∆C
∆Y
Now, K = [∵∆I= ∆Y- ∆C]
∆ Y −∆ C
Dividing the numerator and denominator by ∆Y, we get
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∆Y
∆Y
K=
∆Y ∆C
−
∆Y ∆ Y

K=
1
∵
[
∆C
1−MPC ∆ Y
=MPC
]
1
⇒K=
MPS
[∵MPC + MPS = 1 ⇒ 1 -MPC = MPS
1
Hence, K =
MPS
[Link] tine given figure, what does the gap ‘KT’ represent ? State and discuss any two fiscal measures to
correct the situation. (4)

Ans. ‘KT’ represents inflationary gap which meansaggregate demand is more than aggregate supply
corresponding to full employment level.
Two fiscal measures to correct the situation of inflationary gap are
(i)Revenue Policy To correct the situation of inflationary gap, government raises the rate of all taxes.
This reduces the purchasing power by reducing disposable income (i.e. aftertax income) of the people which in
turn will reduce the aggregate demand in the economy.
(ii)Expenditure Policy To correct the situation of inflationary gap, government should reduce its public
expenditure.
This reduces the purchasing power by reducing total income of the people which in turn will reduce the
aggregate demand in the economy.
15. Read the given excerpt taken from the article 'What is 'Money” published by The Economic Times on 20th
September 2022
"The money came into existence to overcome the drawbacks of the barter system. Earlier, people used to
exchange goods and services as a form of commerce. This often led to many disadvantages, one of which was
the double coincidence of wants. To solve this problem, a standard medium of exchange, money, was
introduced.”
Explain in brief the function of money highlighted in the given excerpt.(4)
Or Define credit multiplier. What role does it play in determining the credit creation power of the banking
system? Use a numerical illustration to explain.
Ans. 'Medium of exchange' is one of the primary and most important function of money.
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Any commodity can be purchased or sold through the medium of money. In other words, money becomes the
representative of general purchasing power. It is the function of money which has made the work of exchange
easy because money has the merit of general acceptability.
This function of money has solved the problem of ‘double coincidence of wants’ created by the barter system
of exchange. Under the barter system, it was very rare when the owner of some goods or services could find
someone who wanted his goods or services and at the same time, he possessed that goods or services that
the first person wanted, e.g.
A man wanting rice in exchange of wheat had to find a man wanting wheat in exchange of rice. This made the
exchange of goods and services difficult. But the evolution of money has solved this problem. A person can
sell his wheat in the market for money and from that money he can purchase rice.
So, the 'medium of exchange' function of money has solved the problem of 'double coincidence of wants'
related with the barter system of exchange,
Or Money multiplier or deposit multiplier measures the amount of money that the banks are able to create in
the form of deposits with every unit of money, it keeps in reserves. It is calculated as
1
Money Multiplier =
LRR
Where, LRR = Legal Reserve Ratio comprising of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio
(SLR).
It should be remembered that higher the value of LRR, lower is the value of money multiplier and less money is
created by the banking system and vice-versa.
e.g. Calculate the value of money multiplier and also find the total deposit created, if there is an initial deposit
of Rs. 1,500 crore and LRR is 15%.
Solution LRR = 15% or 0.15
1 1
Money Multiplier = = = 6.67
LRR 0.15
Initial deposit = Rs. 1,500 crore
Total Deposit = Initial Deposit × Money Multiplier
1
= 1,500 × = Rs. 10,000 crore
0.15
16.(i) “Management of a water polluting oilrefinery says that the it (oil refinery) ensures welfare through its
contribution to Gross Domestic Product". Defend or refute the argument of management with respect to GDP
as a welfare measure of the economy.(3)
(ii) Giving reason, explain the treatment assigned to the following while estimating national income(3)
(a)Interest paid by banks on deposits by individuals
(b)National debt interest
Ans. (i) The above argument is refuted. GDP is notconsidered a good measure of welfare as it fails to take into
effect ‘externalities’.
Externalities refer to the benefits or harms that a firm or an individual causes to another for which they are not
paid.
e.g. river pollution created by an oil refinery has disastrous effects on aquatic life.
It reduces the overall welfare of the society and create negative externality.
(ii) (a) Interest paid by banks on deposits byindividuals should be included in estimation of National Income as
it will be treated as factor income.
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(b) National debt interest should not be included in estimation of national income as it is assumed that
government borrows for consumption and hence, it is treated as transfer payment.
17.(i) From the following data about agovernment budget, find out the following
(a) Revenue deficit (b) Fiscal deficit
(c)Primary deficit(3)

Contents Rs. (in Arab)

Tax revenue 47

Capital receipts 34

Non-tax revenue 10

Bornowings 32

Revenue expenditures 80

Interest payments 20

(ii)Explain the budgetary measures for achieving the objective of setting up of production units in backward
regions. (3)
Or (i) Classify the following taxes into direct and indirect tax. Give reasons for your answer.
(a)Corporation tax
(b)Entertainment tax
(c)Excise duty
(ii)Distinguish between primary and revenue deficit?
Ans. (i) (a) Revenue Deficit = Revenue Expenditure- (Tax Revenue+ Non-tax Revenue)
= 80 - (47 +10) = 80 - 57 = Rs. 23 Arab
(b)Fiscal Deficit = Borrowings
Borrowings = Rs. 32 Arab
Sα: Fiscal Deficit = Rs. 32 Arab
(c)Primary Deficit = Fiscal Deficit – Interest
Payments = 32 -20 = Rs. 12 Arab
(ii)The possible budgetary incentives that agovernment might decide to give to investors for making
investments in backward region are as follows
(a)The government might give a tax-holiday for a stipulated period for such investors
The reason behind this is that the incentive of tax-holiday might motivate the investors to invest in backward
region.
(b)The government may offer subsidy on loans for such investors The provision of subsidy implies that
the investors will not be required to pay back a certain percentage of the loan taken by them. This might induce
them to invest.
(c)The government might waive-off the excise duty on goods manufactured by investors in these
regions Excise duty is levied on goods manufactured or produced in India. Waiving of the excise duty will
ensure that the price of the good is less and this will increase the demand for the good and ensure a ready
market for the product. This will motivate the investors to invest in backward region.
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Or (i) (a) Corporation Tax It is a direct tax as itsimpact and incidence is on the same person (Company).
(b)Entertainment Tax it is an indrect tax as its impact and incidence are on different people.
(c)Excise Duty It is an indirect tax as the burden of its payment can be shifted to another person.
(ii)Difference between primary deficit and revenue deficit are

Basis Primary Deficit Revenue Deficit

Meaning Primary deficit is the difference Revenue deficit is the difference between
between fiscal deficit and interest revenue expenditure and revenue receipts.
payments.

Implications Primary deficit indicates the Revenue deficit shows the inefficiency of the
borrowing requirement of the government to meet its current expenditure.
government.

Scope It has a narrow scope. It has a wide scope.

Section-B (Indian Economic Development)

[Link] chief casual factor responsible for the decline of handicrafts industry in India was (1)
(a)heavy duties on Indian handicrafts products
(b)high tariff on export of raw materials from India
(c)high tariff on import of British goods into India
(d)All of the above
Ans. (a) heavy export duties were imposed on thehandicraft products with a meagre duty on British
manufactured goods resulted in low demand for Indian handicrafts.
19. ………industries were reserved for thepublic sector under Industrial Policy Resolution, 1956.(1)
(a)17(b) 21
(c)15(d) 2.
Or The other name of Village and Small-Scale Industries Committee set-up in 1955 is ....
(a)Lakdawala committee
(b)Karve committee
(c)Narasimham committee
(d)Hussain committee .Ans. (a) 17
Or (b) Karve committee
[Link] main aim of ‘Great Leap Forward' (GLF) in China was to ensure rapidincrease of ……… . (1)
(a) agriculture(b) industries
(c) services(d) exports
Or Introduction of Economic Reforms inChina took place in the year……… .
(a) 1978(b) 1980 (c) 1988(d) 1991
Ans. (b) industries
Or (a) 1978
Uttam Academy || Eros garden- Surajkund - 9311 7788 07
[Link] extraction is above the rate of regeneration of the resource and the wastage are outside the
absorptive capacity of the environment, then environment fails to perform its one of the vital function. What is
that function? (1)
(a)It supplies resources
(b)It assimilates waste
(c)It sustains life
(d)It provides aesthetic services
Ans. (c) The environment is able to perform its functions as long as the demand on these functions is within its
carrying capacity. When demand crosses environment's carrying capacity then environment fails to perform its
vital function of life sustenance and this results in an environmental crisis.
[Link] the correct combination between thefollowing columns(1)

Column A Column B

A. 1850 (i) Establishment of TISCO

B. 1921 (ii) Introduction of railways by the British

C. 1907 (iii) First railway bridge linking Bombay with Thane

D. 1854 (iv) The year of Great Divide

A B C D

(a) (ii) (iv) (iii) (i)

(b) (i) (iv) (iii) (ii)

(c) (ii) (iv) (i) (iii)

(d) (iii) (iv) (i) (ii)

Ans. (c) (ii) (iv) (i) (iii)

[Link] I Self Help Groups (SHGs) have emerged to fill the gap in formed credit system.
Statement II Formal credit system in India, is not only inadequate but also not fully integrated with rural social
community development. (1)
In the light of the given statements, choose the correct alternative from the following
(a)Statement I is true and Statement II is false
(b)Statement I is false and Statement II is true
(c)Both statements are true
(d)Both statements are false
Ans. (c) Both statements are true
[Link] I Proportion of people below poverty line is more in India with respect to Pakistan.
Statement II Maternal Mortality Rate (MMR) is high in Pakistan with respect to China. (1)
In the light of the given statements, choose the correct alternative from the following
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(a)Statement I is true and Statement II is false
(b)Statement I is false and Statement II is true
(c)Both statements are true
(d)Both statements are false
Ans. (b) Pakistan In 2011,24.3% people were belowpoverty line in pakistan, while the ratio was 21.9% in India.
Pakistan In 2017-19 MMR in China was 29 (per one lakh births) while it was 140 (per one lakh births) in
Pakistan.
25. ………..includes quantitative aspects of percapita, GDP and the quality aspects of performance in health
and education. (1)
(a) HD(b) GDI
(c) HDI(d) None of these
Or ……… is a geographical region that haseconomic laws different from a country's typical economic laws.
(a) NEP(b) SEZ
(c) GLF(d) None of these
Ans. (c) HDI Or
(b) SEZ
[Link] (A) Modernisation implies adoption of new technology along with a change in the social and
economic outlook.
Reason (R) Over the years, there have been a reduction in the gender wage parity and in the female labour
force participation rate.(1)
Alternatives
(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 (R) is false
(d)Assertion (A) is false, but Reason (R) is true
Ans. (c) The gender-wage gap has reduced but there has been a substantial increase in the female labor force
participation rate
[Link] (A) In 1970s, there was low population growth in China.
Reason (R) China introduced the one-child norm in late 1970s. (1)
Alternatives
(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 (R) is false
(d)Assertion (A) is false, but Reason (R) is true
Ans. (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
[Link] figure given below depicts that India’s environmental problems pose a dichotomy- they are poverty
induced and at the same time arise due to affluence in living standards.
Do you agree with the given statement? Justify,(3)
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Source [Link] explained/6-5-Crore-live-in-india-slums- over-l-crore-each-in-

maharashtra-andhra- 5577781/
Ans. This is true that India'a environmental problems pose a dichotomy they are poverty induced and at the
same time arise due to affluence in living standards. On one hand, population explosion and widespread
poverty has led to deforestation in India as the poor people in the rural areas are compelled to fell trees for
earning their livelihood and for use as fuel, on the other hand the growing demand for natural resources due to
affluence in living standards in the urban areas is also equally responsible for the present environmental
degradation.
[Link] or refute the statement with valid explanation
"There are more number of regular salaried employees found in urban areas than in rural areas”.(3)
Or Bring out the need for on-the-job-training for a person.
Ans. I defend the given statement. Regular salaried employees are more in urban areas than in rural areas due
to following reasons (i) Education and Training Regular salaried employment requires certain educational
qualifications and professional skills. Education and training facilities are not as good in ruralareas as in urban
areas. Therefore, chances of regular employment are higher for urban people.
(ii) Infrastructure Large companies including MNCs are concentrated in the urban areas due to the presence
of economic infrastructure and availability of modem facilities like banks, transport, communication, etc. These
companies hire regular salaried employees, which results in concentration their in the urban areas.
(iii)Agriculture Rural population is primarily engaged in agricultural sector and are not willing to take the risk of
leaving their farms for regular salaried employment. This is also a reason for regular salaried employment to be
less prevalent in rural areas..
Of Firms provide on-the-job training to their workers to enhance their skiiis which helps in human capital
formation.
On-the-job training is an important factor of human capital formation as it results in enhanced labour
productivity, On-the-job training allows trainees and employees to get acquainted with their co-workers.
Training allows the supervisors or managers to assess progress of a person over a short period of time
enabling them to determine any flaws or problems and rectifying the problem on the spot.
This leads to higher efficiency of not only the person under training but also the organisation as a whole.
[Link] and analyse the given data of India and China, with valid reasons. (4)

Country Annual Growth Rate of Population (2015) Gender Ratio (Per thousand males)

India 1.2 % 929

China 0.5 % 941

Source World Development Indicators, 2015

Ans (i) Annual Growth Rate of Population (2015) The annual growth rate of population in India is high at
1.2%. China has a low growth rate at 0.5%.
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The low growth rate can be attributed to the adoption of one-child policy by China. Also, the high growth rate in
India implies that the population of India will exceed China’s population by 2050.
(ii)Gender Ratio Gender ratio in both the countries is tow, but in India it is more lower than China. A low
gender ratio indicates that both the countries are male-dominated.
31.(i) Give the meaning of demonetisation? (1)
(ii)Discuss briefly any two major steps taken by the Government of India on ‘Financial Sector' front under the
Economic Reforms of 1991.(3)
Or Deepak argues that in the era of privatisation, there is no need for government intervention in education and
health sectors. However, his friend Raju argues that education and health care services create social benefits
and therefore there is a need for government intervention in education and healthsectors. Decide with reasons,
who is right?(4)
Ans. (i) Demonetisation implies stripping the legal tender statue of a currency.
(ii)Financial sector includes financial institutions such as commercial banks, investment banks, stock exchange
and foreign exchange market. The following reforms were initiated in this sector
(a)Competition from New Private Sector Banks The banking sector was opened for the private sector. This
led to an increase in competition and expansion of services for consumers.
(b)Change in the Role of Reserve Bank of India (RBI) RBI’s role underwent a change from a 'regulator’ to a
'facilitator'. Due to this, Foreign Institutional Investors (FIIs) such as merchant bankers, mutual funds and
pension funds were allowed to invest in financial market,
(c)Recent refrom ‘Demonetisation’ India faced its first demonetisation in 1946 and second one in 1978. On
both the occasions, the reason was to combat black money that went circulating wide and large. On 8th
November, 2016, India witnessed its third phase of demonetisation, wherein Prime Minister Narendra Modi
banned Rs. 500 and Rs. 1,000 currency notes with immediate effect.
Or Raju is right, the government intervention in thesesectors is essential due to following reasons
(i)Expenditures on education and health, make substantial long-term impact and they cannot be reversed.
(ii)Individual consumers of education and health services do not have complete information about the quality of
services and their costs.
(iii)The government has to ensure that private institutions in these sectors adhere to the standards stipulated
by the government and charge the correct price.
(iv)In developing economies, a substantial section of society cannot afford to have these services by paying for
it. These should be provided to them by the government,
[Link] whether the following statements aretrue or false, with valid arguments
(i)Substituting fertiliser subsidies withagricultural subsidies as the farmer was benefitting fertiliser industry and
not the target group has been the topic of immense debate regarding provision of subsidies during 1960's and
70's.(2)
(ii)The main reason for constituting KarveCommittee in 1955 was setting capital good industries in rural areas
and thus promoting rural development.(2)
Ans. (i) The given statement is true. It was argued that eliminating subsidies would increase the inequality
between the small and large farmers, thus fertiliser subsidies which benefitted fertiliser industry and big
farmers should be substituted with agricultural subsidies.
(ii) The given statement is false. In 1955, the Village and Small-Scale Industries Committee also called Karve
Committee was set-up which explored the possibility of using small scale industries for promoting rural
development.
33. (i) Define worker population ratio. (2)
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(ii) What do you understand by the term ‘distress sale’? (2) (iii) Literacy rates in India have increased but so
has the absolute number of illiterates. Why? (2)
Or
(i) Enlist some problems faced by farmers during the initial years of organic farming. (3)
(ii) “In recent times, the Indian economy has experienced the problem of casualisation of the workforce. This
problem has only been aggravated by the outbreak of Covid-19."
Do you agree with the given statement? Discuss any two disadvantages of casualisation of the workforce in
the light of the above statement. (3)
Ans. (i) Worker population ratio is defined as the ratio between the total number of workers in a country and the
population in the country, multiplied by 100, Symbolically,
Worker Population Ratio
Total Number of Workers
= × 100
Total Population
(ii) Lack of agricultural marketing infrastructure often forces the farmers to sell their produce at low prices for
fear of spoilage or to pay off an imminent debt.
This is termed as distress sale. Farmers tend to suffer highly on account of these sales, because they not only
get a low price for their produce, but are also cheated by use of false weights and are charged a high
commission,
(iii) Literacy rates in India have increased mainly because of the growth in the educational facilities.
However, with tremendous increase in the population, the absolute number of illiterates have also increased.
Or (i) The problems faced by farmers during the initialyears of organic farming are
(a)Organic farming requires inputs like organic manure, bio-fertilisers and organic pesticides. Though they are
cheaper yet farmers find it difficult to get them.
(b)The yield from organic farming is much less than that of modern agricultural farming,
(c)The price of organic food is high, so it is difficult to sell them.
(d)Organic products generally have more blemishes and shorter shelf life.
(ii)The given statement is quite appropriate withreference to the ‘casualisation of labour' in India.
This is because of the following disadvantages ofcasualisation of the workforce
(a)For casual workers, the rights of the labour are not properly protected by labour laws. Particularly, during
pandemic times, as demand for goods and services fell the casual workers were left jobless, without any
compensation or support.
(b)During the Covid-19 lockdown, millions of casual workers lost their jobs, raising the question of their
survival. Also, additional health expenditure added to their troubles. If such workers had been working under
the formal sector, it would have given them some respite in their difficult times. Thus, this had led to increase in
the problem further.
34. Read the following text carefully and answer the given questions on the basis of the same and common
understanding
One of the most compelling reasons for studying environmental science and management is the fact that, in
the view of many leading authorities, we are now experiencing an environmental crisis, indeed, many authors
have claimed that the present environmental crisis is unprecedented in its magnitude, pace and severity (Park
2001). Awareness of this environmental crisis has grown since the 1970s, partly as a result of the prominence
given to major so-called ‘environmental’ disasters such as the Sahelian droughts of the 1970s and 1980s and
the nuclear accident at Chernobyl in 1986.
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A major assessment of the global environment published in 1999, the UNEP Global Environment Outlook 2000
Report (UNEP 1999), drew, attention to two critical, recurring themes
•the fact that the global human ecosystem is threatened by grave imbalances in productivity and in the
distribution of goods and services as evidenced by the fact that a large proportion of the human population
lives in poverty and that a widening gap exists between those who benefit from economic and technological
development and those who do not
•the fact that accelerating changes are occurring at the global scale, with rates of economic and social
development outstripping progress in achieving internationally co-ordinated environmental stewardship-with
the result that improvements in environmental protection due to new technologies are being ‘cancelled out’ by
the magnitude and pace of human population growth and economic development.
Consequently, a wide range of environmental problems has emerged, those problems include anthropogenic
climate change ('global warming’), the depletion of stratospheric ozone (the 'ozone hole'), the acidification of
surface waters ('acid rain), the destruction of tropical forests, the depletion and extinction of species, and the
precipitous decline of biodiversity. Yet, while all of these problems have physical (environmental)
manifestations, their causes - and their potential solutions - are invariably bound up with human attitudes,
beliefs, values, needs, desires, expectations and behaviours. Thus, the symptoms of the environmental crisis
cannot be regarded purely as physical problems requiring solutions by environmental ‘specialists’, instead,
they are intrinsically human problems and they are intimately related to the question of what it means to be
human.
Source [Link] 000_P500_ESM_K3 736-Demo/unit 1 /page_11. htm
(i)"Opportunity costs of negative environmental impact are high.” Comment. (3)
(ii)There exists a positive correlationbetween environmental sustainability and economics development. Do you
agree? Give suitable reason in support of your answer.(3)
Ans. (i) The negative environmental impact has high opportunity costs as explained below
(a)The industrial development in past has polluted and dried up rivers and other aquifers making water an
economic good. Also, cleaning up of polluted rivers and replenishing water resources require huge
investments.
(b)The intensive and extensive extraction of both renewable and non-renewable resources has exhausted
some of these resources. Huge amount of funds need to be spent on technology and research to explore new
resources.
(c)The health costs of degraded environmental quality are also rising as decline in air and water quality has
resulted in increased incidence of respiratory and water-borne diseases.
(d)Global environmental issues such as global warming and ozone depletion also contribute to increased
financial commitments for the government.
Thus, it is clear that the opportunity costs of negative environmental impacts are high.
(ii) There are two views on the inter-relation between economic development and the environment. They are as
follows
(a)According to the first view, economic development degrades our environment by using natural resources for
production of goods and services. Economic development results in pollution in the form of air pollution, water
pollution and land pollution,
(b)According to the second view, economic development improves environmental quality. The discovery of
new materials and sources not only use fewer natural resources, but sometimes replace them. Thus, with
economic development, degradation of environment decreases.
From the above discussion, we find that relationship between environment and economic development is
dynamic and complex if not positive.
Poverty in developing countries is also said to be responsible for environmental degradation. Poor people rely
on natural resources heavily for their survival, which leads to over use of natural resources. Besides, when the
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cultivable land becomes short relative to population, the poor are forced to make their subsistence by
cultivating fragile land on hills and mountains resulting in soil erosion on a large scale.
It is in such environment that poverty becomes a vicious circle.