1. Which of the following is a flow?

a) Deposits in a bank.

b) Capital.

c) Depreciation.

d) Wealth

2. Read the following statements carefully and choose the correct alternative from the
following:

Statement 1 – Net investment is a stock concept.

Statement 2 – Capital is a flow concept.

Alternatives:

a) Statement 1 is true and statement 2 is false

b) Statement 2 is true and statement 1 is false

c) Both statements 1 and 2 are true

d) Both statements 1 and 2 are false

3. Read the following statement -Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:

Assertion (A): Saving curve makes a negative intercept on the vertical axis at zero level of income.

Reason (R): Saving function refers to the functional relationship between saving and income.

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 and 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.

 4. Money is an asset which can be stored for use in future.’

In the light of given statement, identify the function of money

a) A measure of value

b) A standard of deferred payment

c) A store of value

d) A medium of exchange

5. If Marginal Propensity to save (MPS) is 0.25 and initial change in investment

is Rs 250 crores, then the final change in income would be ________.

a) Rs 1,000 crores
b) Rs 1,200 crores
c) Rs 500 crores
d) Rs 3,500 crores

6. Find the missing figures and choose the correct alternatives:

Round Deposit Loan (80%) Reserve Ratio (20%)

s

I 1,000 800 200

II 800 …(i)… 160

… … …

… … …

Total …(ii)… …(iii)… …(iv)…

a) 640, 1000, 4000, 5000

b) 960, 5000, 4000, 1000
c) 640, 4000, 1000, 5000
d) 640, 5000, 4000, 1000

d) 640, 5000, 4000, 1000

(i) Loan = 80% of Deposits = (0.80 x 800) = Rs 640

(ii) Total Deposits = Initial Deposits x Multiplier
= 1,000 x 5 = Rs 5,000
 (Multiplier = 1/LRR = 1/0.20)
(iii) Total Loan = Total Deposits – Total Reserve = 5,000 – 1,000 = Rs 4,000
(iv) Total Reserve = Initial question about Reserve x Multiplier =
200 x 5 = Rs 1,000

7. Read the following statements carefully and choose the correct alternative
from the following:
Statement 1 – In a two-sector economy, consumption expenditure and
investment expenditure are the two components of Aggregate Demand.
Statement 2 – Aggregate Demand curve always starts from point of origin with
positive slope.

Alternatives:
a) Statement 1 is true and statement 2 is false
b) Statement 1 is false and statement 2 is true
c) Both statements 1 and 2 are true
d) Both statements 1 and 2 are false

8. If in an economy, the Investment Multiplier is 4 and Autonomous Consumption is Rs

30 crore, the relevant consumption would be ________.

a) C = 30 + 0.75 Y
b) C = (-)30 – 0.25 Y
c) C = 30 + 0.25 T
d) C = (-)30 – 0.25 Y

9. If increase in National Income is equal to increase in Savings, the value of

Marginal Propensity to consume would be _______.

a) equal to unity
b) greater than one
c) less than one
d) equal to zero

10. Read the following statement -Assertion (A) and Reason (R). Choose one of the
correct alternatives given below:

Assertion (A): Ex-post investments represent planned Investments, whereas ex-ante

investments represent actual level of investments.
Reason (R): At equilibrium level, ex-ante savings and ex-ante investments are always
equal.

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 and 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.

11. Ms Sheetal, an economics teacher, was explaining the concept of ‘Minimum

percentage of the total deposits to be kept by any commercial bank with the Central
Bank of the country, as per norms and statute prevailing in the country’.

From the following, choose the correct alternative which specifies towards the
concept explained by her.

a) Cash Reserve Ratio

b) Repo Rate
c) Bank Rate
d) Statutory Liquidity Ratio

12. Giving reasons, classify following into intermediate products and final products.

i) Computers installed in an office.

ii) Mobile sets purchased by a mobile dealer.

) Computers installed in an office – Final product

Reason – Offices buy computers as long-term durable products and are investments
for them.

ii) Mobile sets purchased by a mobile dealer – Intermediate products

Reason – A mobile dealer purchases mobile sets for reselling purpose. That’s why it
is considered an intermediate product.

13. Subsidies to the producers should be treated as transfer payments. Defend or refute the
given statement with valid reason.
No, subsidies given to the producers should not be treated as transfer
payments. Subsidies are given to reduce the market price of socially desirable
goods such as fertilisers, LPG gas etc. So that they can be afforded by the
poor section of society.

Transfer payments, on the other hand, are given to fulfil social objectives.
Examples of transfer payments are old age pension, unemployment
allowance etc.

Also, transfer payments are not taken into account while computing the GDP
of the country, but subsidies are considered in the computation of GDP.
“India’s GDP is expected to expand 7.5% in 2024-25. World Bank”.
Does the given statement mean that welfare of people of India increase at the same
rate? Comment with reason.
Generally, it is considered that an increase in the Gross Domestic Product (GDP) of
any economy (India in this case) ensures increase in welfare of the people of the
country. However, this may not always be correct.
Some of the prime reason for the same are
i. Unequal distribution and composition of GDP.
ii) Non-monetary transactions in the economy which are not accounted for in
GDP.
iii)Occurrence of externalities in the economy (both positive and negative )

14. Define reverse repo rate. Discuss briefly, how the instrument helps in controlling credit
creation by commercial banks.
Reverse repo rate is the rate at which commercial banks can deposit their
surplus funds with the Central Bank for a short period of time.

It is an important quantitative tool for controlling money supply in the

economy. If the Central bank wants to increase money supply in the
economy, then it reduces the reverse repo rate. With fall in reverse repo rate,
the commercial banks reduce the deposits of surplus funds with the Central
Bank, thereby increasing the money supply.

On the other hand, if the Central Bank wants to decrease money supply, then
it increases the reverse repo rate. With rise in reverse repo rate, the
commercial banks increase the deposits of surplus funds with the Central
Bank, thereby decreasing the money supply.

Thus, reverse repo rate plays an important role in controlling money supply.

15. An economy is in equilibrium. From the following data, calculate the Marginal
Propensity to Save.

i) Income = Rs 10,000
ii) Autonomous Consumption = Rs 500
iii) Consumption Expenditure = Rs 8,000
We know that,
Consumption Expenditure = ¯C + By,
Where ¯C = Autonomous Consumption,
b = Marginal Propensity
Y = Income
So, on substituting the given variables, we get,
8,000 = 500 + b x 10,000
 Or 8,000 – 500 = b x 10,000
Or b = 7,500/10,000 = 0.75, i.e
Marginal Propensity = 0.75
We also know that,
MPC + MPS = 1,
Where, MPC = Marginal Propensity to Consume and MPS = Marginal Propensity to
Save
On substituting MPC = 0.75, we get,
0.75 + MPS = 1
Or MPS = 1 – 0.75 = 0.25, i.e.
Marginal Propensity to Save = 0.25

16. Complete the following table.

Income Marginal Average Consumption

Propensity to Propensity to Expenditure
Save Save
200 --- 0.4 120
400 --- --- 220
--- --- 0.48 260

Ans
.
Incom Consumption Expenditure (C) Savings APS MPS
e
(S)
(Y)

200 120 80 0.4 ---

400 220 180 0.45 0.5

500 260 240 0.48 0.6

17. The Government has raised the exemption limit for the payment of income tax from Rs 2 2
lakh to Rs 2.5 lakh”.

If the situation of deficient demand is prevailing in the economy, what will be the impact of this
action taken by the Government?

Deficient demand refers to the situation when Aggregate Demand (AD) is less than the Aggregate
Supply (AS) in an economy, corresponding to full employment in the economy.
Here, government has raised the exemption limit for the payment of income tax. This will increase
the purchasing power of the people and will increase both consumption and investment
expenditures.

This rise in consumption and investment expenditures will increase the level of Aggregate Demand
(AD) and will help to check the problem of deficient demand

18. Explain the determination of equilibrium level of national income using ‘saving and
investment’ approach. Use a diagram. Also explain the effects if saving is greater than
investment.

According to this approach of equilibrium, the equilibrium is reached only when Investment (I)
equals Savings(S) because at this level there is no tendency for income and output to change.
In the diagram the equilibrium is at E where savings intersects investment curve.

At this point, I=S.

When S is more than I, then the planned inventory would fall below the desired level. To bring back
the Inventory at the desired level, the producers expand the output More output means more
income. Rise in output means rise in I and rise in income means rise in S. Both continue to rise till
they reach E, S= I.
When S is less than I, then the planned inventory rises above the desired level. To clear the
unwanted increase in inventory, firms plan to reduce the output till S becomes equal

to I.
So, equilibrium takes place only at point E, when S=I.

19. Calculate National Income by expenditure and output method.

Particulars Rs (in Crores)

(i) Gross domestic capital formation 250
(ii) Net exports -50
(iii) Private final consumption expenditure 1000
(iv) Value of output of primary sector 900
(v) Value of output of secondary sector 800
(vi) Value of output of tertiary sector 400
(vii) Intermediate consumption of primary sector 400
(viii) Intermediate consumption of secondary sector 300
(ix) Intermediate consumption of tertiary sector 100
(x) Consumption of fixed capital 80
(xi) Indirect taxes 100
(xii) Government final consumption expenditure 100
(xiii) Subsidies 10
(xiv) Net factor income from abroad -20

National Income by Output method

= {(iv) – (vii)} + {(v) – (viii)} + {(vi) – (ix)} – (x) – {(xi) – (xiii)}+ (xiv)
= {900 – 400} + {800 – 300} + (400 -100} – 80 – {100-10} + (-20)
= Rs 1,110 crores
National Income by Expenditure method
= (i) + (ii) + (iii) + (xii) – (x) – {(xi) – (xiii)} + (xiv)
= 250 + (-50) + 1,000 + 100 – 80 – (100-10) + (-20)
= Rs 1,110 crores
20. Explain the determination of equilibrium level of national income using ‘saving
and investment’ approach. Use a diagram. Also explain the effects if saving is
greater than investment.
According to this approach of equilibrium, the equilibrium is reached only
when Investment (I) equals Savings(S) because at this level there is no
tendency for income and output to change.
In the diagram the equilibrium is at E where savings intersects investment
curve.
At this point, I=S.
When S is more than I, then the planned inventory would fall below the
desired level. To bring back the Inventory at the desired level, the producers
expand the output More output means more income. Rise in output means
rise in I and rise in income means rise in S. Both continue to rise till they
reach E, S= I.
When S is less than I, then the planned inventory rises above the desired
level. To clear the unwanted increase in inventory, firms plan to reduce the
output till S becomes equal
to I.
So, equilibrium takes place only at point E, when S=I.

21. Answer the following questions based on the data given below :
i) Planned investment = Rs 100

ii) C = 50 + 0.5 Y

a) Determine the equilibrium level of income.

b) Calculate the value of Savings at equilibrium level of National Income.

 Calculate the value of Investment Multiplier

a) Equilibrium level of income = C+S

So , Y=C+I
Y=50 + 0.50 Y +100
Y – 0.50 Y = 150
0.50Y = 150
Y = 150/ 0.5
= RS 300 crore
b) Y = C+ S

300 = 50 + 0.50 Y + S
300 = 50 + 0.50 ( 300 ) +S
300 = 200 + S
S = RS 100 crore
c) Investment Multiplier (k) = 1 / 1- MPC

K = 1 /1- 0.5
K= 1/0.5
=2

22. Read the following statements carefully and choose the correct alternative
from the following:

Statement 1 – India is often called as the ‘outsourcing hub’ of the world.

Statement 2 – Availability of skilled manpower is one of the prime factors
responsible for the status gained by India at the international platform.

Alternatives:
a) Both statements 1 and 2 are true
b) Both statements 1 and 2 are false
c) Statement 1 is true and statement 2 is false
d) Statement 2 is true and statement 1 is false

23. Identify the correct pair from the following Column I and Column II and choose
the correct alternative:

Column I Column II
A World Trade Organisation (i) It was founded in 1999

B Reserve Bank of India (ii) It is the Central Bank of

Canada

C International Monetary (iii) It facilitates lending for

Fund reconstruction

D GATT (iv) It was established in 1960

Alternatives:
(a) A-(i)
(b) B-(ii)
(c) C-(iii)
(d) D-(iv)

24. During the British rule in India, Indian agricultural output witnessed stagnation
due to:
a) Decline in handicrafts
b) Drain of Indian wealth
c) Land settlement
d) Introduction of railways

25. Read the following statement -Assertion (A) and Reason (R). Choose one of
the correct alternatives given below:
Assertion (A): Since Independence, the economic conditions of many farmers
across India has improved as they have adopted horticulture as a secondary source
of income.
Reason (R): Varying climatic and soil conditions have given India an added
advantage to be the producer of diverse horticultural crops.

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 and 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.

26. Ms Ramanpreet has started a new business venture. She intends to spend a
huge amount towards ‘on-the-job training’ of her workers before putting them
to work. It exhibits the right step in the direction of Human Capital Formation.

Spot which of the following does not directly contributes to the process of human
capital formation by Ms Ramanpreet.

a) Adds skills and expertise

b) Ensures gender equity
c) Improves efficiency
d) Increases output productivity

27. “During the colonial period, a number of socio-economic indicators were in a

dilapidated state”. List any three such indicators that led to the worsening of
India’s demographic profile.
India’s demographic indicators were in a dilapidated state during the colonial
period as
i) The overall literacy level was less (below 16%).
ii) Life expectancy was very low (32 years).
iii) Alarming infant mortality rate (218/1000).

28. Why should migration and social medicine be viewed as investments in

human capital? Justify with reasons
Migration takes place when people move to new places in search of
opportunities, which involves a high cost. The benefits of the migration
 outweigh the expenditure and hence can be called an investment in human
capital formation.
Social medicine involves spreading health literacy amongst people. This
creates healthy people and more productive labour. Investments in social
medicine directly lead to the increase of human capital in the labour market
and hence can be called an investment in human capital formation.

29. Meena is a housewife. Besides taking care of household chores, she works in
the cloth shop which is owned and operated by her husband. Can she be
considered as a worker? Why?
Meena should be considered as worker
A person who is involved in the production activity and contributes to the
generation of GDP is referred to as a worker. As here Meena works in the
cloth shop to support her husband and contributes to GDP by rendering her
services, so, she can be considered as a worker.

30. “Amazon has been outsourcing to various customer support companies in

India to accommodate more local and international buyers and sellers.”
In light of the above statement, how has the process of globalisation impacted the
Indian economy?
The process of globalisation impacted the Indian economy as it:

i) Generates more employment and job opportunities.

ii) Increases the overall GDP of the country.
iii) Leads to the formalisation of the employment sector.
iv) Limits the availability of social security measures for the workers

31. Enlist some problems faced by farmers during the initial years of organic
farming.
Some of the problems faced by farmers during the initial years of organic
farming are:
i) In the initial years, organic farming has lesser yield as compared to modern
agricultural farming. As a result, small and marginal farmers find difficult to
adapt to large-scale production.
ii) Organic farming faces problems of inadequate infrastructure and marketing
facilities.
iii) Organic produce has a shorter shelf life as compared to sprayed produce.
iv) The choice in production of off-season crops is quite limited in organic
farming
 32. Explain the role of micro-credit in meeting credit requirements of the poor
Micro-credit or Self-Help Group (SHG) has emerged as the major micro
finance programme in the country in recent years.
i) Their focus is largely on those rural poor, who have no sustainable access
to the formal banking system. So, their target groups comprise of small and
marginal farmers, agricultural and non-agricultural labourers, artisans, etc
ii) SHGs promote thrift in small proportions by a minimum contribution from
each member.
iii) From the pooled money, credit is given to the needy members at
reasonable interest rates, which is to be repaid in small installments.
v) By May 2019, nearly 6 crore women in India have become members in 54
lakh women SHGs. Such credit provisions are generally referred to as
micro-credit programmes. SHGs have also helped in the empowerment of
women

33. Define the following terms:

a) Import Substitution
b) Quota
a) Import Substitution – The policy aimed at replacing or substituting imports with domestic
production by protecting the domestic industries from foreign competition is known as import
substitution.

b) Quota – Quantitative restrictions on imports for the protection of the domestic firms from
foreign competition. Under this quantity of goods which can be imported is specified by the
state.

34. “Mr. Rishi, after completing his education, has joined his family business but
his marginal productivity is zero”. Comment upon the employment status of
Mr. Rishi. Give valid reasons in support of your answer.

c) Discuss briefly the concept of ‘Informalisation of workforce’ in India?

a) The type of unemployment indicated in the above statement is disguised
unemployment. It refers to a situation in which an extra input of labour generates no
additional output. It is when marginal physical productivity of labour is zero or
sometimes it becomes negative. The paradox associated with disguised
unemployment in rural areas of India is that while there are more members of a
family engaged in work, yet the gross income of the family is generally low.
This is because the surplus labour force does not contribute to any additional output
or productivity, which means that the family’s income is not proportional to the
number of labourers. In fact, the extra labourers often add to the cost of production,
as they need to be provided with food and other sources, and this leads to lower net
income.

b) The situation depicted in the image is ‘informalisation of workforce’.

Informalisation of workforce in India implies that there is a continuous decline in the
percentage of workforce employed in the formal sector and a corresponding rise in
the percentage of workforce employed in informal sector.
With the implementation of the economic reforms in 1991, many workers were
dismissed from the formal sector and forced to take up jobs in the informal sector,
leading to the considerable rise in the rate of informalisation.

Study the following chart showing the growth of Employment and Gross Domestic
Product and analyse the trend of the two variables from 1990-2012.
-The period between 1990-2012 had been a significant one. Introduction of
economic reforms in India has changed everything in India.
-Variables shown in the given graph show that GDP growth rate has taken an
upwards trend over the years whereas the situation of employment growth rate has
seen major fluctuations while going down in overall trend.
-GDP growth rate has increased from a meager 3.4% in 1991 to 7.8% in 2012.
However the employment growth rate has shown declining trends from 1.5% in 1991
to 1.12% in 2012. Between the period 1999-2005 the employment generation rate
was at peak since independence i.e. 2.28% p.a. with the corresponding GDP growth
rate standing at a decent 6.1 % p.a.
-The gap between the two variables is maximum between the period 2005-10 when
the employment growth rate hit the lowest in history of Independent India i.i. 0.28%.
In the same period the GDP growth rate had hit the highest level since
independence to the tune of 8.7% p.a. Indian economy has witnessed the peculiar
phenomena of ‘jobless growth’ over all these years.
-Learning from the situation government had put in serious efforts on employment
front and brought it to a level of 1.12% p.a. between the 2010-12. In all period
between 1990-2012 has been a real roller coaster ride for the India economy on the
two front of GDP and Employment Growth rate.

Read the following text carefully:

Sustainable development is the development that meets the needs of the present,
without compromising the ability of future generations to meet their own needs. India
is critical in determining the success in a pursuit to achieve sustainable development.
The Union Budget 2023 presented by Finance Minister Nirmala Sitharaman builds
on India’s commitment to lead the global action against climate change, preserve
biodiversity and support sustainable development.
The government has accelerated the pace of Green Growth as India is facing the
grave reality of depleting natural resources, limited supply of water, minerals, and
fossil fuels. In a bid to counter the climate threat, India has committed to achieving
net zero by 2070; released a low-carbon development strategy; and introduced the
concept of ‘LiFE’ (Lifestyle for Environment) to promote responsible consumption.
The Green Growth actions include several pointed measures that would facilitate the
much needed steady decarbonization of Indian industries, reduce dependency on
fossil fuel imports and establish technology and market leadership in this sunrise
sector. For instance: The allocation of Rs 35,000 crore of priority capital investment
towards achieving net zero by 2070, a clean energy transition ensures the country’s
energy security. The outlay of Rs 19,700 crore for the Green Hydrogen Mission will
mobilise a green hydrogen production capacity of 5 metric million tonnes by 2030.
Moreover, to encourage the optimal use of wetlands, enhance biodiversity, carbon
stock, eco-tourism opportunities and income generation for local communities, the
Amrita Dharohar scheme will be implemented over three years.

Source: [Link]
ensured-india-is-primed-for-green-growth.

On the basis of the given text and common understanding, answer the following
questions:
(i) Define sustainable development.
(ii) Briefly elaborate, any two reasons behind the objective of Green Growth being
set up by the Indian Government.

(i) Sustainable development is the development that meets the needs of the present
generation without compromising the ability of the future generations to meet their
own needs.
(ii) The Indian Government has accelerated the pace of Green Growth as India is:
● Facing the grave reality of depleting natural resources, limited supply of water,
minerals, and fossil fuels. This has created a number of environmental issues in the
recent past in India.
● To counter the climate threat, India has committed to achieve a net zero target by
the year 2070. This will facilitate much needed decarbonization of Indian industries,
reduce dependency on fossil fuel imports and to become a market leader in the
sunrise industry.
35. Study the following chart showing the growth of Employment and Gross
Domestic Product and analyse the trend of the two variables from 1990-2012.
-The period between 1990-2012 had been a significant one. Introduction of
economic reforms in India has changed everything in India.
-Variables shown in the given graph show that GDP growth rate has taken an
upwards trend over the years whereas the situation of employment growth rate has
seen major fluctuations while going down in overall trend.
-GDP growth rate has increased from a meager 3.4% in 1991 to 7.8% in 2012.
However the employment growth rate has shown declining trends from 1.5% in 1991
to 1.12% in 2012. Between the period 1999-2005 the employment generation rate
was at peak since independence i.e. 2.28% p.a. with the corresponding GDP growth
rate standing at a decent 6.1 % p.a.
-The gap between the two variables is maximum between the period 2005-10 when
the employment growth rate hit the lowest in history of Independent India i.i. 0.28%.
In the same period the GDP growth rate had hit the highest level since
independence to the tune of 8.7% p.a. Indian economy has witnessed the peculiar
phenomena of ‘jobless growth’ over all these years.
-Learning from the situation government had put in serious efforts on employment
front and brought it to a level of 1.12% p.a. between the 2010-12. In all period
between 1990-2012 has been a real roller coaster ride for the India economy on the
two front of GDP and Employment Growth rate.

Read the following text carefully:

36. Sustainable development is the development that meets the needs of the
present, without compromising the ability of future generations to meet their
 own needs. India is critical in determining the success in a pursuit to achieve
sustainable development. The Union Budget 2023 presented by Finance
Minister Nirmala Sitharaman builds on India’s commitment to lead the global
action against climate change, preserve biodiversity and support sustainable
development.
The government has accelerated the pace of Green Growth as India is facing the
grave reality of depleting natural resources, limited supply of water, minerals, and
fossil fuels. In a bid to counter the climate threat, India has committed to achieving
net zero by 2070; released a low-carbon development strategy; and introduced the
concept of ‘LiFE’ (Lifestyle for Environment) to promote responsible consumption.
The Green Growth actions include several pointed measures that would facilitate the
much needed steady decarbonization of Indian industries, reduce dependency on
fossil fuel imports and establish technology and market leadership in this sunrise
sector. For instance: The allocation of Rs 35,000 crore of priority capital investment
towards achieving net zero by 2070, a clean energy transition ensures the country’s
energy security. The outlay of Rs 19,700 crore for the Green Hydrogen Mission will
mobilise a green hydrogen production capacity of 5 metric million tonnes by 2030.
Moreover, to encourage the optimal use of wetlands, enhance biodiversity, carbon
stock, eco-tourism opportunities and income generation for local communities, the
Amrita Dharohar scheme will be implemented over three years
On the basis of the given text and common understanding, answer the following
questions:
(i) Define sustainable development.
(ii) Briefly elaborate, any two reasons behind the objective of Green Growth being
set up by the Indian Government.

i) Sustainable development is the development that meets the needs of the

present generation without compromising the ability of the future
generations to meet their own needs.
(ii) The Indian Government has accelerated the pace of Green Growth as India is:
● Facing the grave reality of depleting natural resources, limited supply of water,
minerals, and fossil fuels. This has created a number of environmental issues in the
recent past in India.
● To counter the climate threat, India has committed to achieve a net zero target by
the year 2070. This will facilitate much needed decarbonization of Indian industries,
reduce dependency on fossil fuel imports and to become a market leader in the
sunrise industry.
a) “Mr. Rishi, after completing his education, has joined his family business but his
marginal productivity is zero”. Comment upon the employment status of Mr. Rishi.
Give valid reasons in support of your answer.

b) Discuss briefly the concept of ‘Informalisation of workforce’ in India?

a) The type of unemployment indicated in the above statement is disguised
unemployment. It refers to a situation in which an extra input of labour generates no
additional output. It is when marginal physical productivity of labour is zero or
sometimes it becomes negative. The paradox associated with disguised
unemployment in rural areas of India is that while there are more members of a
family engaged in work, yet the gross income of the family is generally low.
This is because the surplus labour force does not contribute to any additional output
or productivity, which means that the family’s income is not proportional to the
number of labourers. In fact, the extra labourers often add to the cost of production,
as they need to be provided with food and other sources, and this leads to lower net
income.

b) The situation depicted in the image is ‘informalisation of workforce’.

Informalisation of workforce in India implies that there is a continuous decline in the
percentage of workforce employed in the formal sector and a corresponding rise in
the percentage of workforce employed in informal sector.
With the implementation of the economic reforms in 1991, many workers were
dismissed from the formal sector and forced to take up jobs in the informal sector,
leading to the considerable rise in the rate of informalisation.

37. Define the following terms:

a) Import Substitution
b) Quota

a) Import Substitution – The policy aimed at replacing or substituting imports with

domestic production by protecting the domestic industries from foreign competition is
known as import substitution.

c) Quota – Quantitative restrictions on imports for the protection of the domestic

firms from foreign competition. Under this quantity of goods which can be
imported is specified by the state.
Comparative Development Experience of India with its Neighbours
Introduction
With the unfolding of the globalisation process, developing countries are keen to
understand the developmental processes pursued by their neighbours as they face
competition from developed nations as also amongst themselves.
Foreign Direct
Investment It is much larger compared to India and Pakistan, and a much stronger
driver of growth. SEZs (Special Economic Zones) policy of China is of central
significance inducing FDI. SEZs are offering robust infrastructural facilities for FDI.
Demographic Profile
Both for India and China, large size of population is a hindrance in the process of
growth, as it requires a huge amount of ‘maintenance investment’.

Human Development Some important parameters of human development are as

these
 Life expectancy-higher the better.
 Adult literacy rate-higher the better.
 Infant mortality rate-lower the better.
 Maternal mortality rate-lower the better.
  Percentage of population having access to improved water sources-higher the
better.
 Percentage of undernourished population-lower the better.

Common Success Story of India and Pakistan

With a view to accelerating the pace of growth, different countries are forming
regional and global economic grouping based on common agreements of bilateral
relations. e.g., SAARC, EU, ASEAN, G-8, G-20.
 A substantial rise in GDP per capita.
 Self-sufficiency in food production.
 Dualistic nature of the economy is gradually declining.
 Considerable reduction in the incidence of poverty.
Common Failures of India and Pakistan
 Relatively slow pace of GDP growth, compared with China.
 Poor perfomance in HDI ranking.
 Dismal Fiscal management.
 Political survival of a dominating issue rather than good governance.
Sex Ratio Sex ratio is found to be low in all three countries pointing to social
backwardness, where people hold high preference for a son in the family.
Nations are also eager to know and understand about the developmental process
pursued by their neighbouring nations. It allows them to comprehend their strengths
and weaknesses. In the process of globalisation, it is essential for every nation to
compete with developed countries.

Development Strategies of India, China and Pakistan

India, China, Pakistan have many similarities in their development strategies which
are as follows
 India, Pakistan and China have started towards their developmental path at
the same time. India and Pakistan became independent nations in 1947.
While Peoples Republic of China was established in 1949.
 All the three countries had started planning their development strategies in
similar ways. India announced its Five Year Plan in 1951-56, while ’ Pakistan
announced its first Five Year Plan in 1956, which is called Medium Term plan.
China announced its First Five Year Plan in 1953.
 India and Pakistan adopted similar strategies such as creating a large public
sector and raising public expenditure on social development.
  Till the 1980s, all the three countries had similar growth rates and per capita
incomes.
 Economic reforms took place in all the three countries. Reforms started in
India in 1991, in China in 1978 and in Pakistan in 1988.
Development Strategies of India
Some of the prominent strategies of India are discussed below
1. Sound Trade System India was a country which had the history of closed trade.
Because of this historical background; there is a critical challenge for India in order to
make a new policy which can support the new open trade system. This new reform
in economies of India has been introduced and accelerates the economic growth of
India.

2. Reduction in Poverty India has adopted several poverty alleviation programmes to

reduce poverty in India. -This would help in increasing per capita income, rise in
nutrition level of poors and there is a subsequent fall in percentage of absolute poor
in some states.
3. Rural Development Under this strategy, India adopted various measures for the
development of areas that are lagging behind in the overall development of village
economy.

4. Employment Generation Several economic reforms were initiated to generate

employment in the country and their aim is to provide gainful self-employment and
skilled wage employment opportunities.

Development Strategies of China

After the establishment of People’s Republic of China under one party rule, all the
critical sectors of the economy, enterprises and lands owned and operated by
individuals were brought under government control.
Certain development strategies of China are discussed below
 Great Leap Forward (GLF) This campaign initiated in 1958 aimed at
industrialising the country on a massive scale. People were encouraged to set
up industries in their backyards. In rural areas, communes were started.
Under the commune system, people collectively cultivated lands.
 Great Proletarian Cultural Revolution (1966-76) In 1965, Mao Tse Tung
started a cultural revolution on a large scale. In this revolution, students and
professionals were sent to work and learn from the country side. Unlike GLF,
the cultural revolution did not have an explicit economic rationale.
 1978 Reforms Since 1978, China began to introduce many reforms in phases.
The reforms were initiated in agriculture, foreign trade and investment sector.
In agriculture, lands were divided into small plots which were allocated to
individual households. They were allowed to keep all income from the land
 after paying taxes.
In later phase, reforms were initiated in industrial sector. All enterprises which
were owned and operated by local collectives in particular, were allowed to
produce goods.
 At this stage, enterprises owned by government (known as State
Board Enterprises – SOEs), in India we call them public sector
enterprises were made to face competition. In reform, prices were
fixed in two ways, i.e., farmers and industrial units were required to
buy and sell fixed quantities of inputs and outputs on the basis of
prices fixed by the government and the rest were purchased and
sold at market prices.
 Over the years, as production increased, the proportion of goods or
inputs transacted in the market also increased. The goal of Chinese
economic reforms was to generate sufficient surplus to finance the
modernisation of the mainland Chinese economy. In order to attract
foreign investors, Special Economic Zones (SEZs) were set up.

Development Strategies of Pakistan

The development strategies of Pakistan are summarised below
 Mixed Economy Pakistan follows a mixed economy system where both public
and private sectors co-existed.
 Import Substitution Pakistan adopted a regulatory policy framework in the late
1950s and 1960s for import industrialisation. The -policy combined tariff
protection for manufacturing of consumer goods together with direct import
controls on competing imports.
 Green Revolution This was introduced to increase the productivity and self
sufficiency in food. This increased the output of foodgrains. This had changed
the agrarian structure dramatically. In 1970’s nationalisation of capital goods
took place. Pakistan shifted its policy orientation in 1970’s and 1980’s when
private sector got encouragement.
During this period, Pakistan received financial support from Western. This helped the
country in stimulating economic growth. Government also offered incentives to
private sector. This had a created climate for new investments. And in 1988 certain
reforms were also initiated in the country.

Success and Failure of Strategies

The development strategies brought structural reforms in China, India and Pakistan.
Follow the description of their success and failure one by one.
Success of Structural Reforms in China
The success of structural reforms in China are
  There was existence of infrastructure in the areas of education and health and
land reforms.
 There was decentralised planning and existence of small enterprise.
 Through the commune system, there was more equitable distribution of
foodgrains.
 There was extension of basic health services in rural areas.
Failures of Structural Reforms in China
The failures of structural reforms in China are
 There was slow pace of growth and lack of modernisation in the Chinese
economy under the Maoist rule.
 Maoist vision of economic development based on decentralisation, self
sufficiency and shunning of foreign technology had failed.
 Despite of extensive land reforms, collectivisation, the great leap forward and
other initiatives, the per capita gain output in 1978 was the same as it was in
the mid-1950s.
China has an Edge Over India
The Chinese reform process began more comprehensively during the 80s, when
India was in the mid-stream of slow growth process.
Rural poverty in China declined by 85% during the period 1978 to 1989. In India, it
declined only by 50% during this period, Global exposure of the economy has been
far more wider in China than in India. China’s export-driven manufacturing has
recorded on exponential growth, while India continues to be only a marginal player in
the international markets.
Common Success of Structural Reforms in India and Pakistan
The common success of structural reforms in India and Pakistan are
 Both India and Pakistan have succeeded in more than doubling their per
capita incomes inspite of high growth rate of population.
 The incidence of poverty has also been reduced significantly. However, the
level of poverty is lower in Pakistan.
 Both the countries have achieved self-sufficiency in the production of food.
 Both the countries have succeeded in developing their service and industry
sectors at a fast rate.
 The use of modern technology is improving in both the countries.
Common Failures of Structural Reforms in India and Pakistan
The common failures of structural reforms in India and Pakistan are
 Growth rate of GDP and its sectoral constituents have fallen in 1990’s.
  Poverty and unemployment are still areas of major concerns in both the
countries.
Areas Where Pakistan has an Edge Over India
Starting from almost the same level as India, Pakistan has achieved better results
with regards to
 Migration of workforce from agriculture to industry,
 Migration of people from rural to urban areas.
 Access to improved water sources.
 Reduction in below poverty line population.
Areas where India has an Edge Over Pakistan
There is little doubt that, in the area of skilled manpower and research and
development institutions. India is better placed than Pakistan. Indian scientists excel
in the areas of defence technology, space research, electronics and avionics,
genetics, telecommunications, etc. The number of [Link] produced by India in
science and engineering every year (about 5000) is higher than the entire stock of
[Link] in Pakistan. Issues of health facilities in general and infant mortality in
particular are better addressed in India.
Comparative Study
With Respect to Demographic Indicators, GDP and HDI .
I. Demographic Indicators
We shall compare some demographic indicators of India, China and Pakistan
 The population of Pakistan is very small and accounts for roughly about one-
tenth of China or India. Though China is the largest nation and geographically
occupies the largest area among the three nations, its density is the lowest.
 One child norm was introduced in China in late 1970’s to check the problem of
population growth. This measure led to decline in the sex ratio. Although sex
ratio is biased against females in all three countries, in recent times, all three
countries are trying to adopt various measures to improve the situation.
After few decades there will be more elderly people in proportion to young
people due to one child norm.
 The fertility rate is low in China and very high in Pakistan.
 Urbanisation is high in both Pakistan and China.
GOVERNMENT BUDGET
 Explain why public goods must be provided by the government.

Public goods are those goods where there is no competition, and the use of goods is not restricted to
only one individual. These goods are for use by all individuals in society. Such goods are used for the
welfare of society.
Therefore, the government should provide public goods for the following reasons:

1. So that benefits of the public goods can be enjoyed by all members of the society.

2. So that the consumption of these goods will not impact the consumption of any other individual.

2. Distinguish between revenue expenditure and capital expenditure.

Basis of Capital Expenditure Revenue Expenditure

Comparison

Definition Expenditure incurred for acquiring assets to The expense incurred for
enhance the capacity of an existing asset that maintaining the day-to-day
results in increasing its lifespan activities of a business

Term Long term Short term

Value addition Enhances the value of an existing asset Does not enhance the value of an
existing asset

Physical Have a physical presence except for intangible Do not have a physical presence
Existence assets

Occurrence Non-recurring in nature Recurring in nature

Capitalisation Yes No

Impact on Do not reduce business revenue Reduces business revenue

Revenue

Benefits Long-term benefits for business Short-term benefits for business

Examples Highway, tunnel, metro projects, etc. Pension, salary, etc.

3. ‘The fiscal deficit gives the borrowing requirement of the government.’ Elucidate.
A fiscal deficit is referred to as a shortfall in the government’s income as compared to its spending. A
high fiscal deficit means that the government is borrowing more money than it is earning. A higher
fiscal deficit creates a burden of loan and interest payments for the future generation.

Fiscal deficit is determined by

Total Expenditure – Total Receipts excluding borrowings

4. Give the relationship between the revenue deficit and the fiscal deficit.

A revenue deficit is referred to as an excess of revenue expenditure as compared to earnings by

revenue receipts of the government. A fiscal deficit is a bigger phenomenon where the difference is
between the total expenditure and total receipts obtained by the government. When the revenue
deficit increases correspondingly, the fiscal deficit also increases.
 1. ‘Distributed Profits’ is also known as:
a) Corporate Tax
b) Dividend
c) Retained Earnings
d) None of these

2. Market value of a motor vehicle at the time of purchase was Rs 7, 50,000. After two
years, its market value is estimated to be Rs 4, 50,000. The reason for fall in the
value is:
a) Normal wear and Tear
b) Passage of Time
c) Expected Obsolescence
d) All of these

3. Which of the following is not a component of operating surplus?

a) Interest
b) Rent
c) Royalty
d) Compensation of Employees

4. If legal reserve ratio is 20%, the value of money multiplier would be ________.

a) 2
b) 3
c) 5
d) 4
 5. According to theory of Keynesian Economics, the value of Average Propensity to
Consume can never be _________.

a) Positive
b) Zero
c) More than one
d) Less than one

6. If in an economy, the value of investment multiplier is 4 and Autonomous

Consumption is Rs 30 Crore, the relevant consumption function would be:

a) C = 30 + 0.75 Y
b) C = (-)30 + 0.25 Y
c) C = 30 - 0.75 Y
d) C = 30 - 0.25 Y

7. Define Credit Multiplier. What role does it play in determining the credit creation
power of the banking system? Use a numerical illustration to explain

8. Distinguish between real and nominal gross domestic product.

9. Explain ‘allocation of resources’ objective of Government budget.

Government through its budgetary policies tries to reallocate resources to ensure fulfilment
of various socio-economic objectives. The government may influence the allocation of
resources through
i) Taxation policy - Heavy taxes may be imposed on harmful products to discourage their
production and subsidies may be provided on the production of socially useful products to
encourage their production.
ii) Government may directly undertake production of certain goods and services in the areas
where private sector may not be willing to participate in production activities.
 10. From the following data about a government budget, calculate:

a) Revenue Deficit
b) Fiscal Deficit

Particulars Rs in Crore

i) Tax Revenue 1,000

ii) Revenue Expenditure 3,821

iii) Non-tax Revenue 2,000

iv) Recovery of Loans 135

v) Capital Expenditure 574

vi) Disinvestment 100

vii) Interest Payments 1,013

11. Outline the steps required to be taken in deriving saving curve from the given
consumption curve. Use diagram.

12. Ms. Sarika is a retired government employee. Every month, she earns rental
income from a property she owns. She has also invested in fixed deposit, which
provide her with interest income. Occasionally, she receives cash transfers from
her family members abroad.
Classify, Ms. Sarika’s income as factor income or transfer income, giving valid
reasons in support of your answer.

Suppose in an economy, the Marginal Propensity to Consume (MPC) is 0.8.

The government introduced an investment project of ₹ 1,000 crore which led to
a manyfold increase in National Income (Y) and Consumption Expenditure (C).
Estimate:
a) Value of Investment Multiplier (k)
b) Missing Values of (i) and (ii)

Rounds Change in Change in Change in Change in

Investment Income Consumption Savings

(I) (Y) (C) (S)

I 1000 1000 800 200

II 800 640 160

…… ..... ….. …….

…… ….. ….. ……..

(i) (ii) 1000

c) “Sum of the Average Propensity to Consume (APC) and Average Propensity

to Save (APS) is always equal to one.”
Justify the given statement with the help of a suitable argument.

38. Explain the determination of equilibrium level of national income using ‘saving and
investment’ approach. Use a diagram. Also explain the effects if saving is greater
than investment.

39. Read the given text carefully:

“The Government has now decided to further promote the development of
mutual funds by throwing the field open to the private sector and joint sector
mutual funds. In order to safeguard the interests of the investing public, and to
encourage a healthy growth of the capital markets, a comprehensive set of
guidelines is being evolved for the operation of all mutual funds.”

Source: [Link] (Budget 1991-92 Speech of Shri

Manmohan Singh Minister of Finance)

Identify the sector under which the aforesaid reform was introduced and choose
the correct option.
a) Industrial
b) Financial
c) Tax
d) Foreign Trad

40. How much educational cess has been imposed by the government on all union
taxes?
a) 1 percent
b) 2 percent
c) 4 percent
d) None of these

Formal Sector includes all those enterprises which employ _______ or more hired workers.
a) 10
b) 20
c) 50
d) 100
Suppose in an economy, the Marginal Propensity to Consume (MPC) is 0.8.
The government introduced an investment project of ₹ 1,000 crore which led to
a manyfold increase in National Income (Y) and Consumption Expenditure (C).
Estimate:
a) Value of Investment Multiplier (k)
b) Missing Values of (i) and (ii)

Rounds Change in Change in Change in Change in

Investment Income Consumption Savings

(I) (Y) (C) (S)

I 1000 1000 800 200

II 800 640 160

…… ..... ….. …….

…… ….. ….. ……..

(i) (ii) 1000

c) “Sum of the Average Propensity to Consume (APC) and Average Propensity

to Save (APS) is always equal to one.”
Justify the given statement with the help of a suitable argument.

From the set of terms given in Column I and corresponding facts given in
Column II, choose the correct pair of statements.
 Column A Column B

(a) Animal Husbandry i Instability in income

(b) Fisheries ii Mixed crop-livestock farming system

iii India is the second-largest producer of

(c) Horticulture
fruits and vegetables in the world

(d) Agro-processing industry v Iron and steel industry

Options:
A. (a)-i
B. (b)-ii
C. (c)-iii
D. (d)-iv

13. Which of the following statements is not true about the demographic condition of
India during the Colonial period?
a) Infant mortality rate was very high
b) After 1921, India entered the second stage of demographic transition
c) Life expectancy was too high
d) Female literacy rate was just 7%

14. Explain, how does ‘Investment in Human Capital’ contribute to growth of an economy.
15. Comment upon any three salient features of demographic conditions of India on the
eve of Independence.

Read the following text carefully:

The National Education Policy (NEP) 2020, asserts that education is fundamental for
achieving full human potential, providing universal access to quality education and
leadership on the global stage in terms of economic growth, social justice and equality. Thus,
it presents the best way forward for developing and optimising India’s resources.
To attain the goals of education, NEP 2020 unequivocally endorses a substantial increase in
public investment in education by both the Central government and all State governments.
This is considered extremely critical for achieving the high-quality and equitable public
education system that is truly needed for India's future progress and growth. To achieve this,
they need to Panel A Panel B 9 Please note that the assessment scheme of the academic
session 2024-25 will continue in the current session i.e. 2025-26. increase the public
investment in Education sector to reach 6% of GDP at the earliest.
One of the primary goals of the schooling system must be to ensure that children
are enrolled in and are attending school. As per the 75th round household
survey by NSSO in 2017-18, the number of out of school children in the age
group of 6 to 17 years is 3.22 crore. With a goal to achieve 100% Gross
Enrolment Ratio in preschool to secondary level by 2030, it will be a top priority
to bring these children back into the educational fold as early as possible, and
to prevent further students from dropping out. For the same, two initiatives that
will be undertaken are to provide:

• effective and sufficient infrastructure, so that all students have access to

safe and engaging school education at all levels from pre-primary school
to Grade 12.
• regular trained teachers at each stage, special care shall be taken to
ensure that no school remains deficient on infrastructure support.

On the basis of the given text and common understanding, answer the following
questions:
a) “Education is considered fundamental for achieving full human
potential”. Justify the given statement with valid arguments.
b) Discuss the importance of increasing public expenditure in education.
c) State any two main initiatives that may be implemented to tackle school dropouts and
avert additional students from leaving school.

a) The education is fundamental for achieving full human potential providing

universal access to quality education and leadership on the global stage in
terms of economic growth, social justice and equality. Thus, it presents the best
way forward for developing and optimising India’s resources.

b) To create a high-quality and equitable public education system essential for

India's future development and growth, it is imperative to boost the public
investment in education sector to 6% of GDP at the earliest.

c) Two main initiatives which will be implemented to tackle school dropouts and
avert additional students from leaving school are to provide:
• effective and sufficient infrastructure, so that all students have access
to safe and engaging school education at all levels from pre-primary
school to Grade 12.
• regular trained teachers at each stage, special care shall be taken to
ensure that no school remains deficient on infrastructure support

a) “The process of globalisation through liberalisation and privatisation has

produced positive, as well as negative results for India.”
Do you agree with the given statement? Give valid explanation in support of
your answer.

b) “The Government of India was compelled to introduce the economic reforms

of 1991.”
State any two reasons behind the introduction of Economic Reforms of 1991.
a)Yes, the process of globalisation has yielded both positive, as well as, negative results for
India. It is argued that globalization serves as an opportunity for developing countries like
India to access the capital and technology of the global markets. However, some critics
argue that globalisation primarily benefits developed nations, and undermines the welfare of
people in underdeveloped countries thereby exacerbating economic disparities. In the
context of India, the reforms of the 1990’s mainly benefited high-income groups and select
service sectors instead of crucial areas like agriculture and industry.

b) Two reasons behind the introduction of Economic Reforms of 1991 were:

• High rate of inflation
• Huge Balance of Payments Deficit

a) “Government made a fresh statement of policy on the 30th April, 1956 which
will help speeding up industrialisation and, in particular, to develop heavy
industries and machine making industries, to expand the public sector, and to
build up a large and growing co-operative sector”.

Source:[Link] Commission)

In the light of the given text and common understanding, comment upon the
classification of industries under the revised policy.

b) “The implementation of land ceiling legislation in India encountered several

challenges that hindered its effectiveness.”
Do you agree with the given statement? Give valid reasons in support of your
Answer

a) The industries were classified under three heads as per Industrial Policy
Resolution 1956:
• The first category, comprised industries which would be exclusively
owned by the government.
• The second category, private sector could supplement the efforts of
the public sector, with the government taking the sole responsibility for
starting new units.
• The third category consisted of the remaining industries which were
left in the hands of private sector.

b) Yes. A few former Zamindars, used legislative loopholes to continue to own

large areas of land. Tenants were evicted and the landowners claimed to be
self-cultivators. The big landlords delayed its implementation; by challenging it
in the courts. They used this delay to register their lands in the name of close
relatives, thereby escaping from the legislation. Consequently, creating
hindrances in the successful implementation of land ceiling reforms.

Study the following chart showing the Growth of Employment and Gross Domestic Product
and analyses the trend of the two variables from 1990-2012.

The period between 1990 to 2012 had been a significant one. Introduction of Economic
Reforms in India has changed everything in India. Variables shown in the graph show that
GDP growth rate has taken an upward trend over the years, whereas the situation of
Employment growth rate has seen major fluctuations while going down in overall trend.
GDP growth rate has increased from a meager 3.4% in 1991 to 7.8% in 2012. However the
employment growth rate has shown declining trends from 1.5% in 1991 to 1.12% in 2012.
Between the period 1999-2005, the employment generation rate was at peak since
independence i.e. 2.28% p.a. with the corresponding GDP growth rate standing at a decent
6.1% p.a.
The GDP between the two variables is maximum between the period 2005-10, when the
employment growth rate hit the highest level since independence to the tune of 8.7% p.a.
Indian economy has witnessed the peculiar phenomena of ‘jobless growth’ over all these
years. Learning from the situation government had put in serious efforts on employment front
and brought it to a level of 1.12% p.a. between the period 2010-12

What is meant by sustainable development? Discuss briefly any two strategies of

sustainable development
Sustainable development is a way of meeting the needs of the
present without compromising the ability of future generations to
meet their own needs, balancing economic growth, environmental
protection, and social well-being. Two strategies to achieve this
are the use of renewable energy sources and afforestation and
reforestation.
Strategies for Sustainable Development:
i) Use of non-conventional sources of energy
ii) Use of Cleaner fuels
iii) Establishment of Mini- Hydel Plants
iv) Traditional knowledge and Practices
v) Use of Bio-compost
vi) Control of Biopest
vii) Change unsustainable patterns of consumption and production
Any four points

Enlist some problems faced by farmers during the initial years of organic farming.
Some of the problems faced by the farmers during the initial years of organic farming are:
i) In the initial years, organic farming has a lesser yield as compared to modern agricultural
farming. As a result, small and marginal farmers find difficult to adapt to large-scale
production.
ii) Organic farming faces problems of inadequate infrastructure and marketing facilities.
iii) Organic produce has a shorter shelf life as compared to sprayed produce.
iv) The choice in production of off-season crops is quite limited in organic farming.

Discuss briefly the importance of micro-credit programs in rural development.

Micro-credit or Self-Help Group (SHG) has emerged as the major micro finance programme
in the country in recent years.
a) Their focus is largely on those rural poor, who have no sustainable access to the formal
banking system. So, their target groups comprise of small and marginal farmers, agricultural
and nonagricultural labourers, artisans, etc
b) SHG promote thrift in small proportions by a minimum contribution from each member.
c) From the pooled money, credit is given to the needy members at reasonable interest
rates, which is to be repaid in small instalments.
d) By May 2019, nearly 6 crore women in India have become member in 54 lakh women
SHGs. Such credit provisions are generally referred to as micro-credit programmes. SHGs
have also helped in the empowerment of women.

Comment upon any three salient features of demographic conditions of India on the eve of
Independence.

i) High birth rate and death rate

ii) Extremely low literacy rate
iii) Poor health facilities
iv) High infant mortality rate
v) Low life expectancy
vi) Widespread poverty

Briefly discuss the various problems of human capital formation.

Insufficient resources
ii) Serious inefficiencies
iii) Brain Drain
iv) High growth of population
v) Several imbalances
vi) Lack of proper manpower planning
vi) weak science and technology

Explain, how does ‘Investment in Human Capital’ contribute to growth of an economy.

Human capital and economic growth are interrelated to each other, as capital formation
helps in speeding up economic growth and facilitates the formation of human capital. The
relation between economic growth and human capital formation is given below:

1. A skilled worker will enhance productivity which will result in better production and
numbers. The immediate impact of high-quality goods is revenue generation which helps in
the growth of an economy.

Human capital and economic growth are interrelated to each other, as capital formation
helps in speeding up economic growth and facilitates the formation of human capital. The
relation between economic growth and human capital formation is given below:

1. A skilled worker will enhance productivity which will result in better production and
numbers. The immediate impact of high-quality goods is revenue generation which helps in
the growth of an economy.
 2. An educated and skilled worker may come up with innovative solutions which will result in
a reduction of cost and process optimisation. It will result in economic growth.

3. People with higher technical skills are able to motivate more to follow the same path, and
this brings involvement which will help in the economic growth and development of the
nation

Which of the following statements is not true about the demographic condition of India during
the Colonial period?
a) Infant mortality rate was very high
b) After 1921, India entered the second stage of demographic transition
c) Life expectancy was too high
d) Female literacy rate was just 7%

From the set of terms given in Column I and corresponding facts given in
Column II, choose the correct pair of statements.

Column A Column B

(a) Animal Husbandry i Instability in income

(b) Fisheries ii Mixed crop-livestock farming system

iii India is the second-largest producer of

(c) Horticulture
fruits and vegetables in the world

(d) Agro-processing industry v Iron and steel industry

Options:
A. (a)-i
B. (b)-ii
C. (c)-iii
D. (d)-iv

_______ is not a cause for environmental degradation.

a) Waste management
b) Deforestation
c) Global warming
d) Guarding green cover

Formal Sector includes all those enterprises which employ _______ or more hired workers.
a) 10
b) 20
c) 50
d) 100

How much educational cess has been imposed by the government on all union taxes?
a) 1 percent
b) 2 percent
c) 4 percent
d) None of these

Read the given text carefully:

“The Government has now decided to further promote the development of
mutual funds by throwing the field open to the private sector and joint sector
mutual funds. In order to safeguard the interests of the investing public, and to
encourage a healthy growth of the capital markets, a comprehensive set of
guidelines is being evolved for the operation of all mutual funds.”

Source: [Link] (Budget 1991-92 Speech of Shri

Manmohan Singh Minister of Finance)

Identify the sector under which the aforesaid reform was introduced and choose
the correct option.
a) Industrial
b) Financial
c) Tax
d) Foreign Trad
Read the following statement -Assertion (A) and Reason (R). Choose one of the
correct alternatives given below:

Assertion (A): Indian rural credit system was significantly transformed with the
implementation of technological reforms in agriculture sector.
Reason (R): Green Revolution led to the diversification of the portfolio of rural
credit towards production-oriented lending.
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 and 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.

Read the following statements carefully and choose the correct alternative from the
following:

Statement 1 – The nature of unemployment problem in India is uni-faceted.

Statement 2 –– Worker population ratio is an indicator used for analyzing the employment
situation in the country

Alternatives:
a) Both statements 1 and 2 are true
b) Both statements 1 and 2 are false
c) Statement 1 is true and statement 2 is false
d) Statement 2 is true and statement 1 is false

Refer to the given text carefully:

Revenue receipts of the Union Government of India, consisting of tax revenue and non-tax
revenue increased year-on-year by 14.5% in the financial year 2023-24, with robust growth
in both tax and non-tax revenues.
In spite of the global trend of widening fiscal deficit and increasing debt burden,
India has remained on the course of fiscal consolidation. In the post-covid
period, significant fiscal consolidation could be achieved largely due to buoyant
Government revenues. The favourable fiscal performance in the financial year
2022-23, emerged as the cornerstone of India’s macroeconomic stability.
The fiscal deficit of the Union Government has been brought down from 6.4%
of Gross Domestic Product (GDP) in the financial year 2022-23 to 5.6% of GDP
in the financial year 2023-24, according to the data released by the Office of
Controller General of Accounts (CGA).
Strong growth in direct and indirect taxes on account of resilient economic
activities and increased compliance meant that the tax revenues generated
exceeded the budgetary estimates.
Additionally, higher-than-budgeted non-tax revenue in the form of dividends
from the Reserve Bank of India (RBI) has buffeted revenue receipts. In
combination with restrained revenue expenditure, these buoyant revenues
ensured lower deficits.
A decomposition of the fiscal deficit over the past few years reveals that with a
narrowing revenue deficit, a larger share of the fiscal deficit is being accounted
for by capital outlay. This suggests that the productivity of borrowed resources
has improved.
Source: Economic Survey 2023-24
On the basis of the given text and common understanding, answer the following
questions:
(I) Differentiate between the two types of revenue receipts as indicated
in the above text.
(II) Elaborate the reasons behind reduction in fiscal deficit of India for the
financial year 2023-24

(I) Tax revenue receipts refer to the receipts of the government through taxes.
These are the compulsory transfer payments imposed by the government on
individuals, corporations, and other entities.
Whereas; Non-tax revenue receipts refers to those revenue receipts of the government from
sources other than taxes. These mainly consist of interest , dividends, fees etc.

(II) The fiscal deficit declined due to robust growth in direct and indirect taxes, driven by
resilient economic activities and improved tax compliance. Furthermore, higher-than-
anticipated non-tax revenue, particularly dividends from the RBI, boosted overall revenue
receipts. In addition to this, controlled revenue expenditure also contributed to the reduction
in the fiscal deficit.

 Explain the determination of equilibrium level of national income using ‘saving and
investment’ approach. Use a diagram. Also explain the effects if saving is greater
than investment

Ans) According to this approach of equilibrium, the equilibrium is reached only when
Investment (I) equals Savings(S) because at this level there is no tendency for income and
output to change.
In the diagram the equilibrium is at E where savings intersects investment curve.
At this point, I=S.
When S is more than I, then the planned inventory would fall below the desired level. To
bring back the Inventory at the desired level, the producers expand the output More output
means more income. Rise in output means rise in I and rise in income means rise in S. Both
continue to rise till they reach E, S= I.
When S is less than I, then the planned inventory rises above the desired level. To clear the
unwanted increase in inventory, firms plan to reduce the output till S becomes equal
to I.
So, equilibrium takes place only at point E, when S=I.
Suppose in an economy, the Marginal Propensity to Consume (MPC) is 0.8.
The government introduced an investment project of ₹ 1,000 crore which led to
a manyfold increase in National Income (Y) and Consumption Expenditure (C).
Estimate:
a) Value of Investment Multiplier (k)
b) Missing Values of (i) and (ii)

Rounds Change in Change in Change in Change in

Investment Income Consumption Savings

(I) (Y) (C) (S)

I 1000 1000 800 200

II 800 640 160

…… ..... ….. …….

…… ….. ….. ……..

(i) (ii) 1000

c) “Sum of the Average Propensity to Consume (APC) and Average Propensity

to Save (APS) is always equal to one.”
Justify the given statement with the help of a suitable argument.
  Ms. Sarika is a retired government employee. Every month, she earns rental
income from a property she owns. She has also invested in fixed deposit, which
provide her with interest income. Occasionally, she receives cash transfers from
her family members abroad.
Classify, Ms. Sarika’s income as factor income or transfer income, giving valid
reasons in support of your answer

Outline the steps required to be taken in deriving saving curve from the given consumption
curve. Use diagram.
From the following data about a government budget, calculate:

a) Revenue Deficit
b) Fiscal Deficit

Particulars Rs in Crore

i) Tax Revenue 1,000

ii) Revenue Expenditure 3,821

iii) Non-tax Revenue 2,000

iv) Recovery of Loans 135

v) Capital Expenditure 574

vi) Disinvestment 100

vii) Interest Payments 1,013

 Explain ‘allocation of resources’ objective of Government budget

Free distribution of LPG connection to poor people is a sign of social justice’. Identify
the ‘Objective of Government Budget’ from the above mentioned statement.

a) Promote Economic Growth

b) Management of public enterprises
c) Create equitable distribution of income
d) Create fluctuation in revenue of the government

Read the following statement: Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
ASSERTION (A): In case of public goods, non-paying users are known as free riders.
REASON (R): Public goods are rivalrous and non-excludable in nature.

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 and 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
Read the following statement and choose the correct alternative among those given below:
Statement 1: Excess demand does not affect the level of output because economy is
already at full employment level.
Statement 2: Excess demand leads to a rise in general price level of the economy.

Alternatives:
a) Both the statements are true
b) Both the statements are false
c) Statement 1 is true and statement 2 is false
d) Statement 2 is true and statement 1 is false

If in an economy, the value of investment multiplier is 4 and Autonomous Consumption is Rs

30 Crore, the relevant consumption function would be:

a) C = 30 + 0.75 Y
b) C = (-)30 + 0.25 Y
c) C = 30 - 0.75 Y
d) C = 30 - 0.25 Y

According to theory of Keynesian Economics, the value of Average Propensity to Consume

can never be _________.

a) Positive
b) Zero
c) More than one
d) Less than one

If legal reserve ratio is 20%, the value of money multiplier would be ________.
a) 2
b) 3
c) 5
d) 4
Read the following dialogue between two people:

Sita : I want 1 kg of potatoes

Rani: What will you give in exchange?
Sita : I can give you 2 litres of milk in return for the potatoes
Rani: I don’t need milk. I want a pair of shoe

Which of the following problem is being faced by Sita and Rani in their exchange process?

a) Lack of double coincidence of wants

b) Absence of common units of value
c) Lack of store of value
d) Lack of standard of deferred payment

Which of the following is not a component of operating surplus?

a) Interest
b) Rent
c) Royalty
d) Compensation of Employees

Market value of a motor vehicle at the time of purchase was Rs 7, 50,000. After two years,
its market value is estimated to be Rs 4, 50,000. The reason for fall in the value is:
a) Normal wear and Tear
b) Passage of Time
c) Expected Obsolescence
d) All of these
‘Distributed Profits’ is also known as:
a) Corporate Tax
b) Dividend
c) Retained Earnings
d) None of these
With reference to the given diagram, which of the following is true at point B?
(Choose the correct option)
a) Slope of Consumption Curve =0
b) Average Propensity to Consume = 0
c)Slope of Saving Curve = 1
d) Average Propensity to Consume=1

Suppose in a hypothetical economy, the income rises from ₹.5,000 crores to ₹ 6,000
crores. As a result, the consumption expenditure rises from ₹4,000 to
₹4,600 crores. Marginal Propensity to Consume in such a case would be________.
(a) 0.8
(b) 0.4
(c) 0.2
d) 0.6

Two under-graduate students were looking for a government job in a newspaper and
found the auction advertisement of AIR INDIA. It read “AIR INDIA is allowing private
investors to purchase this loss-making unit via e-auction.” After doing it, selling of
AIR INDIA will become a part of which source of revenue/expenditure?
a) Revenue receipts
b) Capital receipts
c) Revenue expenditure
d) Capital expenditure

‘Gifts and remittances to abroad’ are recorded on the:

a) Credit side of Current Account
b) Debit side of Capital Account
c) Debit side of Current Account
d) Credit side of Capital Account
Based on the given diagram: The trade under current account during January 2024
reflects a _________ of USD _____ billion.

(Choose the correct option to fill up the blank)

a)surplus, 0.74
b) surplus, 3.85
c) deficit, 0.74
d) deficit, 3.85

Which out of the following items is not included in the money supply of a country?
a) Time deposits
b) Coins and Currency
c) Deman d deposits
d) All of these

Suppose that the Balance of Trade (BOT) of a nation, exhibits a surplus of ₹ 20,000
crores. The import of merchandise of the nation is half of the exports of merchandise
to the rest of the world. The value of exports would be ₹________ crores.
a) 30,000
b) 40,000
c) 24,000
d) 35,000
“As per the National Stock Exchange (NSE) data, dated 9th June, 2023, there was a
net selling off worth ₹309 crore by Foreign Institutional Investors (FIIs) over the
period of one month i.e., 9th June, 2023,”
The above-mentioned transactions will be recorded on ________ side of _______
Account of Balance of Payments of India. (Choose the correct alternative to fill in the
blanks)
a) Debit, Current
b) Credit, Capital
c) Credit, Current
d) Debit, Capital
Refrigerator in a hotel is a ______________ good, whereas a refrigerator at home is
a ________ good.
a) Capital; Consumer
b) Consumer; Capital
c) Consumer; Consumer
d) Capital; Capital

Identify which of the following banks does not interact directly with the general
public?
a) Bank of India(BOI)
b) State Bank of India (SBI)
c) Union Bank of India (UBI)
d) Reserve Bank of India (RBI)

Suppose output produced during the year 2019 and 2021 was 500 and 650 units
respectively. If market price of the output produced was ₹150 and ₹200 per unit,
then calculate percentage change in Real GDP and Nominal GDP, taking year 2019
as Base Year.

B) Explain and graphically represent the concept of inflationary gap. Explain any two
measures of removing this gap

An inflationary gap arises when aggregate demand (AD) exceeds the aggregate
supply (AS) at the level of full employment.
In other words, it is the excess of planned expenditure (AD) over the available output
at full employment.
This leads to rise in the general price level (inflation) since resources are fully
employed and cannot produce more output.
AS (Aggregate Supply) is vertical at the full employment level of output.
AD₁ is the aggregate demand at full employment equilibrium.
AD₂ is a higher level of aggregate demand.
The horizontal distance between AD₂ and AD₁ represents the inflationary gap — the
excess demand in the economy.
Effects:
Excess demand causes rise in prices.
Leads to demand-pull inflation.
May result in overheating of the economy.
Measures to Remove Inflationary Gap:
(i) Monetary Measures (by Central Bank):
Increase in Bank Rate / Repo Rate: Makes borrowing costlier and reduces credit
availability.
Increase in Cash Reserve Ratio (CRR): Reduces banks’ lending capacity. These
steps reduce investment and aggregate demand, thereby controlling inflation.
(ii) Fiscal Measures (by Government):
Reduction in Public Expenditure: Government cuts its own spending to reduce total
demand.
Increase in Taxes: Reduces disposable income and curbs private consumption and
investment.
Together, this lower aggregate demand and help eliminate the inflationary gap.

From the following data, calculate National Income by

a) Income method
b) Expenditure method

Particulars ₹ in lakhs
(i) Current transfers from rest of the world 100
(ii) Government final consumption expenditure 1,000
(iii) Wages and salaries 3,800
(iv) Dividend 500
(v) Rent 200
(vi) Interest 150
(vii) Net domestic capital formation 500
(viii) Profits 800
(ix) Employers' contribution to social security 200
schemes
(x) Net exports (-)50
(xi) Net factor income from abraod (-)30
(xii) Consumption of fixed capital 40
(xiii) Private final consumption expenditure 4,000
(xiv) Net indirect tax 300
Explain any two indicated measures taken by the Central Bank to control the
Highlighted macroeconomic issue.

Ans) To deal with the situation of highlighted macroeconomic issue i.e. inflation, the
Central Bank may use the following measures:

i)Repo Rate: A rise in repo rate will force the commercial banks to increase the
lending rates, making the credit dearer for the general public, discouraging the
borrowings. Consequently, Aggregate Demand will fall thus correcting the problem of
inflation in the economy.
ii) Open Market Operations: The Central Bank can sell government securities in the
open market, thereby, reducing the availability of funds with the commercial banks
for lending. Consequently, Aggregate Demand will fall thus correcting the problem of
inflation in the economy

Explain the steps taken in derivation of the saving curve from the consumption curve.
Use diagram.
The consumption curve (C) shows the relationship between income (Y) and
consumption (C).
The saving curve (S) shows the relationship between income (Y) and saving (S).
Since
Saving = Income – Consumption (S = Y – C), the saving curve can be derived from
the consumption curve.

Steps in Derivation:

Step 1:
Draw a 45° line (line OL) through the origin to represent Income = Consumption.
On this line, every point shows that the entire income is consumed (no saving).

Step 2:
Draw the Consumption Curve (CC) — it starts from a positive intercept on the Y-axis
(indicating autonomous consumption) and rises with income but at a slower rate.

Step 3:
At low income levels, the consumption curve (CC) lies above the 45° line — meaning
Consumption > Income, so Saving is negative (dissaving).

Step 4:
At a particular income level (say Y₁), the consumption curve intersects the 45° line —
here Consumption = Income and Saving = 0.

Step 5:
Beyond this point, the consumption curve lies below the 45° line — meaning
Consumption < Income, so Saving becomes positive.

Step 6:
Now, by plotting the corresponding saving values (negative, zero, positive) against
income, we derive the Saving Curve (SS).

B) ‘Many large Multinational Corporations (MNCs) have recently shifted their

investments from China and have started their production in India, thereby boosting
the Make in India plans of the Government.’ Presuming other factors being constant,
discuss the effects of the given statement on Foreign Exchange rates with reference
to the Indian
This means foreign companies are bringing capital into India to set up factories and
production units. Such inflows of funds from abroad are called Foreign Direct
Investment (FDI).

Likely Effects on Foreign Exchange Rate:

i) Increase in Supply of Foreign Currency:

When MNCs invest in India, they bring foreign currency (like US dollars) into the
country. This increases the supply of foreign exchange in the Indian foreign
exchange market.
ii) Increase in Demand for Indian Rupees:

These MNCs need to convert their foreign currency into Indian Rupees to pay for
land, labor, and other production costs in India. Hence, demand for rupees rises.

iii) Appreciation of the Indian Rupee:

With greater supply of foreign currency and higher demand for rupees, the value of
the rupee tends to rise. Therefore, the exchange rate (₹ per US$) decreases —
meaning the rupee appreciates.
iv) Overall Economic Impact:

Appreciation of the rupee may make imports cheaper and help control inflation.
However, it could make exports slightly less competitive if the trend continues for
long.
(A) The government, under Ujjwala Yojana, is providing free LPG kitchen gas
connections to the families ‘below the poverty line’. What objective the government is
trying to fulfil through the government budget and how? Explain.

(B) Explain the ‘redistribution of income’ objective of government budget

a) Slope of Consumption Curve =0

b)Average Propensity to Consume = 0
c)Slope of Saving Curve = 1
d) Average Propensity to Consume=1

Suppose in a hypothetical economy, the income rises from ₹.5,000 crores to ₹ 6,000
crores. As a result, the consumption expenditure rises from ₹4,000 to
₹4,600 crores. Marginal Propensity to Consume in such a case would be________.
(a) 0.8
(b) 0.4
(c) 0.2
d) 0.6

Two under-graduate students were looking for a government job in a newspaper and
found the auction advertisement of AIR INDIA. It read “AIR INDIA is allowing private
investors to purchase this loss making unit via e-auction.” After doing it, selling of AIR
INDIA will become a part of which source of revenue/expenditure?
a) Revenue receipts
b) Capital receipts
c) Revenue expenditure
d) Capital expenditure

‘Gifts and remittances to abroad’ are recorded on the:

a) Credit side of Current Account
b) Debit side of Capital Account
c) Debit side of Current Account
d) Credit side of Capital Account

Based on the given diagram: The trade under current account during January 2024
reflects a _________ of USD _____ billion.

(Choose the correct option to fill up the blank)

a)surplus, 0.74
b) surplus, 3.85
c) deficit, 0.74
d) deficit, 3.85
Which out of the following items is not included in the money supply of a country?
a) Time deposits
b) Coins and Currency
c) Demand deposits
d) All of these

Suppose that the Balance of Trade (BOT) of a nation, exhibits a surplus of ₹ 20,000
crores. The import of merchandise of the nation is half of the exports of merchandise
to the rest of the world. The value of exports would be ₹________ crores.
a) 30,000
b) 40,000
c) 24,000
d) 35,000

“As per the National Stock Exchange (NSE) data , dated 9th June, 2023 , there was a
net selling off worth ₹309 crore by Foreign Institutional Investors (FIIs) over the
period of one month i.e., 9th June, 2023,”
The above mentioned transactions will be recorded on ________ side of _______
Account of Balance of Payments of India. (Choose the correct alternative to fill in the
blanks)

a) Debit, Current
b) Credit, Capital
c) Credit, Current
d) Debit, Capital

Refrigerator in a hotel is a ______________ good, whereas a refrigerator at home is

a ________ good.
a) Capital; Consumer
b) Consumer; Capital
c) Consumer; Consumer
d) Capital; Capital

Identify which of the following banks does not interact directly with the general
public?
a) Bank of India(BOI)
b) State Bank of India (SBI)
c) Union Bank of India (UBI)
d) Reserve Bank of India (RBI)
 Suppose output produced during the year 2019 and 2021 was 500 and 650 units
respectively. If market price of the output produced was ₹150 and ₹200 per unit,
then calculate percentage change in Real GDP and Nominal GDP, taking year 2019
as Base Year.

Year Units Market Price (₹) Real GDP (₹) Nominal GDP
(₹)

2019 500 150 75,000 75,000

2021 650 200 97,500 1,30,000

% Change in Real GDP = Change in Real GDP x 100 / Base Year GDP
= 97,500 – 75,000 x 100 / 75,000
= 30 %
% Change in Nominal GDP = Change in Nominal GDP x 100 / Base Year GDP
= 1,30,000 – 75,000 x 100 / 75,000
= 73.33 %

A) “Foreign Institutional Investors (FIIs) remained net seller in the Indian capital
markets over the last few weeks.
--- The Economic Times
State and discuss the likely effects of the given statement on foreign exchange rate
with reference to the Indian Economy.
Foreign Institutional Investors (FIIs) are overseas entities (like mutual funds, pension
funds, insurance companies, etc.) that invest in India’s financial markets — mainly
shares and bonds.

When FIIs are net sellers, it means they are withdrawing more money from India
than they are investing. To do this, they sell their Indian assets (like stocks) and
convert the proceeds from Indian Rupees (INR) to foreign currency (like the US
Dollar).
Likely Effects on the Foreign Exchange Rate:

i) Increased Demand for Foreign Currency:

When FIIs sell Indian securities, they need to repatriate the money back to their
home countries.
This increases the demand for foreign currencies (like USD) in the forex market.

ii) Increased Supply of Indian Rupees:

As FIIs sell their investments and convert the proceeds to dollars, the supply of
Indian Rupees in the foreign exchange market increases.

iii) Depreciation of the Indian Rupee:

Due to higher demand for foreign currency and greater supply of rupees, the value of
the rupee tends to fall relative to the dollar.
Hence, the exchange rate (₹ per US$) increases — meaning the rupee depreciates.

iv) Impact on the Indian Economy:

Imports become costlier, as more rupees are needed to buy the same amount of
foreign goods. Exports may become more competitive, since Indian goods become
cheaper for foreign buyers.

Inflationary pressures might rise, as imported goods and oil become more
expensive. The current account deficit may widen if capital outflows continue.

B) ‘Many large Multinational Corporations (MNCs) have recently shifted their

investments from China and have started their production in India, thereby boosting
the Make in India plans of the Government.’ Presuming other factors being constant,
discuss the effects of the given statement on Foreign Exchange rates with reference
to the Indian

This means foreign companies are bringing capital into India to set up factories and
production units. Such inflows of funds from abroad are called Foreign Direct
Investment (FDI).

Likely Effects on Foreign Exchange Rate:

i) Increase in Supply of Foreign Currency:

When MNCs invest in India, they bring foreign currency (like US dollars) into the
country. This increases the supply of foreign exchange in the Indian foreign
exchange market.
ii) Increase in Demand for Indian Rupees:

These MNCs need to convert their foreign currency into Indian Rupees to pay for
land, labor, and other production costs in India. Hence, demand for rupees rises.
iii) Appreciation of the Indian Rupee:

With greater supply of foreign currency and higher demand for rupees, the value of
the rupee tends to rise. Therefore, the exchange rate (₹ per US$) decreases —
meaning the rupee appreciates.
iv) Overall Economic Impact:

Appreciation of the rupee may make imports cheaper and help control inflation.
However, it could make exports slightly less competitive if the trend continues for
long.

Explain the steps taken in derivation of the saving curve from the consumption curve.
Use diagram.
The consumption curve (C) shows the relationship between income (Y) and
consumption (C).
The saving curve (S) shows the relationship between income (Y) and saving (S).
Since
Saving = Income – Consumption (S = Y – C), the saving curve can be derived from
the consumption curve.

Steps in Derivation:

Step 1:
Draw a 45° line (line OL) through the origin to represent Income = Consumption.
On this line, every point shows that the entire income is consumed (no saving).

Step 2:
Draw the Consumption Curve (CC) — it starts from a positive intercept on the Y-axis
(indicating autonomous consumption) and rises with income but at a slower rate.

Step 3:
At low income levels, the consumption curve (CC) lies above the 45° line — meaning
Consumption > Income, so Saving is negative (dissaving).

Step 4:
At a particular income level (say Y₁), the consumption curve intersects the 45° line —
here Consumption = Income and Saving = 0.

Step 5:
Beyond this point, the consumption curve lies below the 45° line — meaning
Consumption < Income, so Saving becomes positive.

Step 6:
Now, by plotting the corresponding saving values (negative, zero, positive) against
income, we derive the Saving Curve (SS).
 A) Explain the national income determination in an economy using saving
and investment approach. Use diagram.
In a two-sector economy (households and firms), national income is determined at
the level where planned saving equals planned investment.
This is known as the Saving–Investment (S–I) approach to income determination.

Saving (S): Part of income that is not spent on consumption.

Investment (I): Expenditure made by producers on capital goods (machinery,

buildings, etc.).

Equilibrium Condition:

1. Households save a part of their income, which represents leakage from the
income flow.
2. Firms invest in capital goods, which represents injection into the income flow.
3. As long as injections (I) equal leakages (S), the economy is in equilibrium.
4. If Saving > Investment, aggregate demand is less than output income falls.

5. If Saving < Investment, aggregate demand exceeds output income rises.

6. Hence, equilibrium level of national income is determined where planned saving =
planned investment.
The Saving Curve (S) slopes upward, showing that saving increases with income.
The Investment Curve (I) is horizontal, indicating planned investment is autonomous
(constant).

 Equilibrium income (Yₑ) is determined at the point where S = I.

B) Explain and graphically represent the concept of inflationary gap. Explain any two
measures of removing this gap

B) Explain and graphically represent the concept of inflationary gap. Explain any two
measures of removing this gap
An inflationary gap arises when aggregate demand (AD) exceeds the aggregate
supply (AS) at the level of full employment.
In other words, it is the excess of planned expenditure (AD) over the available output
at full employment.
This leads to rise in the general price level (inflation) since resources are fully
employed and cannot produce more output.
AS (Aggregate Supply) is vertical at the full employment level of output.
AD₁ is the aggregate demand at full employment equilibrium.
AD₂ is a higher level of aggregate demand.
The horizontal distance between AD₂ and AD₁ represents the inflationary gap — the
excess demand in the economy.
Effects:
Excess demand causes rise in prices.
Leads to demand-pull inflation.
May result in overheating of the economy.
Measures to Remove Inflationary Gap:
(i) Monetary Measures (by Central Bank):
Increase in Bank Rate / Repo Rate: Makes borrowing costlier and reduces credit
availability.
Increase in Cash Reserve Ratio (CRR): Reduces banks’ lending capacity. These
steps reduce investment and aggregate demand, thereby controlling inflation.
(ii) Fiscal Measures (by Government):
Reduction in Public Expenditure: Government cuts its own spending to reduce total
demand.
Increase in Taxes: Reduces disposable income and curbs private consumption and
investment.
Together, this lower aggregate demand and help eliminate the inflationary gap.

INDIAN ECONOMIC DEVELOPMENT

The colonial government made no sincere attempts to estimate India's national and
per capita income, but most studies found that India's national income growth in the
pre-Independence era was per cent and per capita income growth was per cent.

(a) close to 5; more than 2

(b) less than 3; more than 1
(c) close to half: almost 0
(d ) less than 2: close to half

After independence, the rationale behind choosing Modernization as a planning

objective for the Indian economy were ____.

(i) To bring positive changes in the social outlook

(ii) Equitable distribution of income
(üi) Technological Upgradation
(iv) Increase in Economic Divide
Alternatives:
(a) (i) and (ii)
(b) (ii) and (iii)
(c) (i) and (iii)
(d) (i) and (iv)

Before the advent of Green Revolution in 1960s, India was primarily dependent
on_______for the supply.

(a) United States of America (USA)

(b) Britain (United Kingdom)
(c) Mexico
(d) Union of Soviet Socialist Republic (USSR)

Read the following statement: Assertion (A) and Reason (R). Choose one of
the correct alternatives given below:

ASSERTION (A): Human capital formation increases the rate of participation of

population to economic activities and leads to economic growth.

REASON (R): Rate of participation of people refers to the percentage of people

engaged in production process of a country.

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 and 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.

Which of the following is a crucial area of improvement for rural banking?

(a) Risk protection for small businesses
(b) Profitability of non-farm activities
(c) Culture of deposit mobilisation
(d) Sustainable development

Kavitha, a farmer in rural India, is a recipient of a government scheme named

_______. This scheme helps her set up a bank account and provides insurance,
overdraft and other social security benefits.
(a) Sansad Adarsh Gram Yojana
(b) Jan Dhan Yojana
(c) Kudumbashree
(d) NABARD

______sector was the primary focus of the Great Leap Forward in China.

Options:
(a) Tax
(b) Industrial
(c) Financial
(d) Educational

Father of Green Revolution in India is:

(a) MS Swaminathan
(b) Norman Borlaug
(c) Chidambaram Subramaniam
(d) PC Mahalanobis

Identify the incorrect statement from the following:

(a) Diversification into other sector into other sector is essential to enable rural
people to overcome poverty
(b) Diversification is an essential component because there is greater risk in
depending exclusively on farming for livelihood
(c) Diversification provides supplementary gainful Under employment.
(d ) Diversification activities are not beneficial.

Identify the correct pair from the following Column I and Column II and choose the
correct alternative:

Column I Column II
A Brundtland Commission (i) It emphasizes on adoption of
techniques which helps in
sustainable development.

B Appiko movement (ii) It took place in the Himalayas.

C CPCB (iii) It was established in 1960
D Chipko Movement (iv) It took place in Bengal.
Alternatives:
(a) A-(i)
(b) B-(ii)
(c) C-(iii)
A) Describe briefly a rationale behind choosing Self-reliance' as a planning objective
for the Indian economy.
After independence, India faced economic dependence on foreign countries for
essential goods, technology, and capital. Choosing self-reliance as a planning
objective was aimed at:

i) Reducing dependence on imports: By promoting domestic production of goods and

technology.
ii) Strengthening economic independence: Ensuring the country could sustain itself
without being vulnerable to external shocks.
iii) Encouraging industrial and agricultural development: Fostering growth in
domestic industries, agriculture, and infrastructure.
iv) Promoting balanced regional development: Utilizing local resources and skills to
create employment and reduce regional disparities.
v) Building national confidence: Empowering India to compete globally while
maintaining economic sovereignty.

B) 'Land ceiling promotes equity.’ Support the given statement with valid reason

Land ceiling means fixing the maximum size of land which could be owned by an
individual, beyond which it would be taken over by the government and would be
allotted to landless and small farmers. The purpose of land ceiling was to reduce the
concentration of land ownership in few hands and hence promotes equity

Describe the path of developmental initiatives taken by Pakistan for its economic
development.
Pakistan also follows the mixed economy model like India.
- In the late 1950's and 1960's Pakistan introduced a variety of regulated policy
framework (for import substitution based industrialization).
- The policy framed combined tariff protection for manufacturing of consumer
goods along with direct import controls.
- The introduction of the Green Revolution led to mechanization.
- Increase in public investment in infrastructure in select areas, ultimately
resulted in a rise in the production of food grains. This brought about a
change in the agrarian structure.
- In the late 1970's and 1980's Pakistan shifted its policy orientation, when the
major thrust areas were denationalization and encouragement to private
sector.
- Financial support was also received by Pakistan from western nations and
remittances from increasing outflow of emigrants to the Middle-East. This
helped the country to promote its economic growth
- The government also offered incentives to the private sector.
- A conducive climate was thereby created for new investments in the country
Give any three challenges facing Indian education system.
Three challenges facing the Indian education system:
i)Access and Enrolment Issues:
Many children, especially in rural and remote areas, do not have access to quality
schools, leading to low enrolment and high dropout rates.
ii) Quality of Education:
There is a shortage of trained teachers, outdated curricula, and inadequate
infrastructure, resulting in poor learning outcomes.
iii) Inequality and Regional Disparities:
Education opportunities vary widely between urban and rural areas, rich and poor,
and different states, creating inequalities in literacy and skill development.

Interpret the given image on account of Population Policy and resultant effects in
China.

)China's vast worker pool powered the explosive growth of its export-driven economy
over the past decade, but, now, it faces a labour shortage as it
seeks to move away from low-grade products into those with more added value.

ii)A lack of skilled workers because of one child norm since late 1970s is pushing up
wages and adding to the burden of companies already facing shrinking

iii) For global China markets, the demographics pose a huge challenge requiring
difficult and innovative decisions in terms of policies on social welfare funding.
Population Control and employment and labour development.

iv) This lead China to allow couples to have two children first (2016) and then three
children’s
A) Compare and analyse the 'Women Worker Population Ratio` in Rural and Urban
areas based on following information:

The data given in the table reveals that:

(a) Women constitute 16.5% of the total worker population in the economy.
(b) The number of women wokers in rural areas (17.5%) is relatively higher than the
women workers in urban areas (14.2%). Due to abject poverty in rural areas, rural
women are compelled to work more than their urban counterparts.

B) Discuss briefly the concept of Informalisation of workforce in India.

Informalisation of workforce refers to a situation wherein there is a continuous
decline in the percentage of workforce in the formal sector and a simultaneous rise in
the percentage of workforce in the informal sector. In India, informalisation of the
workforce is a recent phenomenon. Growth and development generally leads to a
rise in the number of individuals employed in the formal sector and a fall in the
number of individuals employed in the informal sector. However, in India there has
been a reversal of this trend. Estimates reveal that nearly 93% of the workers in
India are engaged in the informal sector, while only 7% are engaged in the formal
sector. Some argue that this increase in the extent of informalisation is a result of the
reforms of 1991 which transformed India from a "socialist" economy to a "market"
economy. In the end, we can say that the workforce in India is increasingly becoming
informalized.

A) Explain how, Goods and Services Tax (GST) has simplified the multiplicity of
taxes on goods and services.

B) Briefly explain any three negative impacts of New Economic Policy in India.

A) Goods and Services Tax (GST) has simplified the multiplicity of taxes on goods
and services. It can be understand through following points.
i) One Nation, One Tax: GST has subsumed various central and state taxes like
excise duty, VAT, service tax, and entertainment tax into a single tax, eliminating the
complexities of dealing with multiple tax laws and authorities
ii) Reduced Cascading Effect: Under the old system taxes were levied on top of
other taxes (tax-on- tax), increasing the cost of goods and services. GST introduced
an input tax credit mechanism, where businesses can claim credits for taxes paid at
earlier stages of production, reducing the overall tax burden
iii) Uniform Tax Rates: GST has established standard tax rates across the country,
bringing uniformity This has simplified compliance for businesses operating in
multiple states.
iv) Ease of Compliance: GST has streamlined processes through a centralized,
digital platform for registration, filing returns, and payments. This reduces paperwork
and improves transparency.
B) Negative impact of New Economic Policy:
i)The biggest consequence of the new free market policies is acute inequality. The
new reforms have increased the incomes of only high income groups and the poor
have been left out of the benefits of the reforms
ii) There is a great deal of variation in economic growth among the Indian states and
between states And between the rural and urban areas. The growth has
concentrated only in some selective areas in The service sector such as
telecommunication. Entertainment, finance, travel and hospitality Services, real
estate and trade.
iii) The information technology sector which has benefited most from the reforms
employs fewer Than one million people. Job creation in the urban Technology sector
does little to create economic gains for India’s rural poor.

C) Explain the need and type of land reforms implemented in the agriculture sector
At the time of independence, the land tenure system was characterised by
intermediaries called zamindars, jagirdars, etc. They collected rent from the actual
[Link] contributing to improvements on the farm, This demotivated the actual
tillers and resulted in low productivity. Due to this reason, there was an urgent need
for land reform policy.
The agricultural sector in India adopted the following types of land reform
strategies:
(i) Abolition of intermediaries: The zamindari system was abolished and ownership
rights were given to the actual tillers of land. onia
(ii) Regulation of rent: Rent was regulated and a maximum limit of 33% of the value
of the crop was fixed.
(iii) Land ceiling: The maximum size of landholding that an agricultural household
could own was limited. The surplus land was acquired after paying compensation
and was re-distributed among poor farmers.
(iv) Consolidation of landholding: To increase productivity, farmers were given a
big piece of land in place of small and fragmented fields.
(v) Cooperative farming: Cooperative farming was encouraged to get benefit from
the gains of consolidation of holdings.
Read the following text carefully:

India has aimed to reduce the country's carbon intensity by approximately 45% by
2030. To achieve this, ‘Green Finance’ plays a vital role. At the initial stages, Green
Finance needs a big push from the government. The Indian government has
identified projects worth 25,000 Crore that will be financed by proceeds from
Sovereign Green Bonds. According to the framework approved by the Finance
Ministry, the Sovereign Green Bonds will focus on financing public projects including
renewable energy, climate change, clean transportation, sustainable water and
waste management and pollution control. Businesses that take Green Finance can
benefit in various ways. It can help them follow different environmental norms and
regulations and thus avoid possible fines. Adopting sustainable developmental
practices enhances Brand value of businesses, Customers tend to prefer Brands
that adopt clear sustainable development practices. The energy-efficient and other
sustainable development practices promoted by Green Finance also often help in
Saving cost, boosting profitability of businesses etc.
_The Economic Times, April 22, 2023 (Modified)

On the basis of given text and common understanding Answer the following
questions:
(a) Define sustainable development
(b) State the public project areas, where Sovereign Green Bond are focused
(c) How can businesses benefit from Green Finance?

(a) Sustainable development is a concept that aims to meet the needs of the present
generation without compromising the ability of future generations to meet their own
needs. It involves balancing economic growth, social progress,and environmental
protection to ensure long-term prosperity and well- being for both present and future
generations.
(b) The Sovereign Green Bonds will focus on financing public projects including
renewable energy, [Link], clean transportation, sustainable water and
waste management and pollution control.
(c) Businesses that take Green Finance can get benefits in various ways. It can help
them follow different environmental norms and regulations and thus avoid possible
fines. Adopting sustainable developmental practices enhances brand value of
businesses. Customers tend to prefer brands that adopt clear sustainable
development practices. The energy-efficient and other sustainable development
practices promoted by Green Finance also often help in saving cost, boosting
profitability of businesses etc.
"The Indian Rupee has depreciated from ₹ 75 per USD to ₹ 84 per USD over recent
months. This depreciation has been influenced by factors such as rising global oil
prices, a widening current account deficit, and increased demand for the US Dollar in
international trade settlements.
In light of and the above statement, explain the economic impact of currency
depreciation on India’s imports and exports.

The depreciation of the Indian Rupee means more Rupees are required to purchase
one US Dollar, indicating a weakening of the domestic currency.
(i) Impact on Imports
As the Rupee depreciates, imports become more expensive because Indian
importers must spend more Rupees to buy the same quantity of goods priced in
Dollars. This is especially significant for essential imports like crude oil and
electronics, leading to a higher import bill and potentially widening the current
account deficit.
(ii) Impact on Exports
On the other hand, Indian exports become cheaper and of Indian more goods,
competitive in global markets. Foreign buyers require fewer Dollars to purchase the
same amount of Indian goods which can boost export demand and benefit Indian
exporters.

A firm notices that its goods are piling up in inventory because people are not
purchasing as much as expected. The marketing manager believes this could be due
to low demand in the economy. Meanwhile, the finance manager points out that
investment has also slowed down, affecting overall income generation.

Using the concepts of aggregate demand and aggregate supply, explain how
equilibrium level of income is determined in an economy. What happens when
aggregate demand is not equal to aggregate supply?

The equilibrium level of income in an economy is determined where Aggregate

Demand (AD) equals Aggregate Supply (AS), i.e, AD= AS. At this point, the total
planned expenditure matches the total output produced, and there is no tendency for
income to change.
i) If AD > AS, there is excess demand. This leads to a fall in inventories, prompting
firms to increase production. As a result, income and employment rise until
equilibrium is restored.
ii) If AD < AS, there is excess supply. Unsold goods accumulate, causing firms to cut
down production. This reduces income and employment leading the new economy
back to equilibrium.
Hence, equilibrium ensures that planned spending equals planned output,
maintaining stability in the economy.

Rohan is preparing for the RBI Grade-B exam and comes across a recent RBI
bulletin. The bulletin mentions that India's M, money supply grew by 9% over the last
year due to an increase in demand deposits and currency held by the public.
Rohan's friend Anaya, who studies economics, tells him that the RBI uses different
measurements like M1, M2, M3, and M4, to analyse the liquidity in the economy.
However, Rohan is confused about what exactly "M1" includes and how the RBI
defines "money supply" in the first place.

(i) In the light of the above situation, explain the M1,' measurement of money supply
as used by the RBI.
(i) What does the term 'money supply' encompass in terms of the components used
by the RBI?

(i) The total stock of money in circulation among the public at a particular point of
time is called money supply. Money supply is a stock variable.

M1=CU+DD

Where, CU is Currency (notes plus coins) held by the public and DD is net Demand
Deposits held by commercial banks. The word 'net' implies that only deposits of the
public held by the banks are to be included in money supply. The interbank deposits,
which a commercial bank holds in other commercial banks, are not to be regarded
as part of money supply. M money [Link] referred to as transaction money.
(ii) The term 'money supply' encompasses the total amount of money available in the
economy, including currency in circulation, demand deposits, savings deposits and
other liquid assets.

The Government, under Ujjwala Yojana, is providing free LPG kitchen gas
connections to the families "below the poverty line`. What objective is the
government trying to fulfil through the government budget and how? Explain.

The Government, through the Ujjwala Yojana, is providing free LPG gas connections
to Below Poverty Line (BPL) families.
The main objective fulfilled through the government budget is the objective of
redistribution of income and social welfare.

(i) Poor households generally depend on traditional fuels like wood or coal, which are
unsafe, unhealthy and time-consuming.

(ii) By allocating funds in the government budget for free LPG connections, the
government subsidies essential goods for the poor, helping to reduce the burden of
poverty.
(iii) This improves their standard of living, promotes women’s health and safety, and
encourages clean energy usage.

Thus, the Ujjwala Yojana helps in achieving equitable distribution of resources and
social security for weaker sections of society.

(A) “Management of a water polluting oil refinery says that 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.

(B) Giving reason, explain the treatment assigned to the following while estimating
national income
(a) Interest paid by banks on deposits by individuals
(b) National debt interest.
(A)The argument of the oil refinery management is refuted.
Although the oil refinery contributes to GDP by producing goods of high monetary
value, GDP is not a complete measure of economic welfare, and therefore its claim
of ensuring welfare is misleading.
1. GDP ignores negative externalities:Water pollution caused by the refinery
harms aquatic life, the health of nearby residents, and agricultural productivity. These
environmental costs are not deducted from GDP. Thus, while GDP rises, welfare
actually falls.
2. GDP measures only market value, not social well-being:Pollution leads to
higher medical expenses and cleanup costs. Ironically, these costs may increase
GDP further, but they reduce welfare.
3. Unequal distribution of gains:The income earned from the refinery may not
reach the affected local population. Hence, even if GDP increases, welfare for the
community may decline.
4. Loss of natural resources:Depletion and contamination of water resources
reduce long-term sustainability, which GDP fails to capture.

(B) (a) Interest paid by banks on deposits by individuals

Treatment: Included in national income as net interest, but only the net interest
earned by banks is counted.
Interest paid on deposits is a factor payment made by banks to households for the
use of their savings. However, banks also receive interest from borrowers. National
income includes only the difference between interest received and interest paid
because: A large part of the interest paid by banks is simply a transfer of income, not
payment for productive services.
(b) National debt interest

Not included in national income.

National debt interest is the interest the government pays on loans taken from the
public. It is treated as a transfer payment, because the government does not hire any
factor of production in return for this payment. There is no productive activity
associated with this interest payment.

In a simple Keynesian two-sector model, the government sector is expected not to

involve the production activity. The government is expected to stay out of the market
and maintain law and order.
However, in a general economy, the government has to play its part directly or
indirectly. Directly the government is involved in production activities where market
mechanisms fail to attain desirable targets. Indirectly, the government is involved in
terms of collecting tax and non-tax revenues.
(i) Explain the impact on aggregate demand, if government involves
in the economy both directly and indirectly,

(ii) "Monetary measures offer a valid solution to the problem of inflationary

gap in an economy." State and discuss any two monetary measures to
justify the given statement.

(i)Aggregate demand is the sum total of consumption expenditure, investment

expenditure and government expenditure (when included). With the involvement of
government directly aggregate demand will increase, whereas if government is
included indirectly through taxes, it impacts consumption expenditure. Increase taxes
decreases disposable income and hence consumption and vice-versa in case of
decrease in taxes

(ii) Inflationary gap refers to the situation when Aggregate Demand (AD) is more than
Aggregate Supply (AS) at the full employment level.
Two measures which may be used to solve the problem of inflation are

(a) An increase in Cash Reserve Ratio (CRR) may reduce the credit creation
capacity of the commercial banks in the [Link] may lead to a a fall fall in in
the the borrowings from banks causing a fall in consumption and aggregate demand
in the economy and helps to correct the inflationary gap in the economy.
(b) Sale of government securities in the open market by the central bank will
adversely affect the ability of the commercial banks to create credit in the economy.
As a result, aggregate demand in the economy may fall due to fall in consumption
and correct the inflationary gap in the economy.
Read the following figure carefully and choose the correct option from the
alternatives given below:

Alternatives :

(A) Real
(B) Circular
(C) Nominal
(D) Either (A), (B) or (C)

Read the following statements carefully:

Assertion (A): Net Domestic Product (NDP) is always less than Gross Domestic
Product (GDP) due to the adjustment for depreciation.

Reason (R): Depreciation represents the wear and tear of capital goods over time,
which must be subtracted from GDP to obtain NDP, reflecting the actual addition to
the economy’s productive capacity.

Choose the correct option from those given below:

(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

The difference between Gross Domestic Product (GDP) and Net Domestic Product
(NDP) is ______.
Choose the correct option to fill in the blank.

(A) Depreciation
(B) Net Indirect Taxes
(C) Net Factor Income from Abroad
(D) Personal Disposable Income

If the value of investment multiplier (K) is 5, the relevant saving function would
be_______
(A) S=-60+075Y
(B) S=-60+0.25Y
(C) S=-60+060Y
(D) S=-60+ 0.20Y

Identify which of the following items will not be included in estimating national
income of India.
(A) Salary to Indian residents working at the Russian Embassy in India
(B) Income generated from smuggling
(C) Payments to farm workers in the form of food grains
(D) Interest paid by a firm to a bank

Which of the following best illustrates the use of Moral Suasion by the Central Bank?
(A) The RBI mandates banks to maintain a higher CRR to reduce liquidity.
(B) The RBI appeals to banks to restrict credit to speculative sectors, without issuing
any official order.
(C) The RBI raises the repo rate to control inflation.
(D) The government passes a law to limit foreign investment in specific sectors.

"India is likely to substantially top up the allocation for ongoing Production-Linked

Incentive (PLI) schemes in the 1st February budget after seeing good results," said
people with knowledge of the matter. Some new sectors may be included in the
programme that seeks to reignite manufacturing in India and boost exports, along
with other measures to spur investments," said the ET report.

Which of the following objectives of the budget is shown in the above news article?
(A) Reducing inequality of income and wealth
(B) Reallocation of resources
(C) Control deflation
(D) Economic stability
An increase in investment of ₹500 crore leads to an increase in national income of ₹
2,000 crore. What is the value of the Marginal Propensity to Consume (MPC)?
(A) 0.5
(B) 0.75
(C) 0.6
(D) 0.8

Observe the graph carefully

The slopes of the consumption curve and saving Curve are related because

(A)Marginal Propensity to Consume (MPC) + Marginal Propensity to Save (MPS) = 1

(B)APC + APS =1
(C)Consumption always exceeds saving
 (D)Both curves have identical slopes

In the context of the current account, identify the incorrect statement f from the
following.
(A) Export of goods and services are recorded as credi t items
(B) Import of goods and services are recorded as debit items
(C) All transfer receipts are recorded as debit items
(D) All transfer payments are recorded as debit items

Calculate 'sales' from the following information.

[Link] Items Rs (in crores)

i Subsidies 400
ii Opening stock 200
iii Net Value Added at Factor Cost 4000
iv Closing Stock 100
v Domestic Purchase of Inputs 4000
vi Consumption of Fixed Capital 1400
vii Import Of Raw Material 2000
GDPmp= Net Value Added at Factor Cost-+ Consumption of Fixed Capital Subsidies
=4,000 + 1,400 – 400= ₹5,000 crore
Sales = GDPmp – (Closing Stock -Opening Stock) + (Domestic Purchase of Inputs + Import of
Raw Material)
=5,000 – (100 – 200) + (4,000 + 2,000)
= 5,000 + 100 + 6,000= ₹ 11,100 crore

Identify which of the following is an incorrect function of environment?

(A) Supplies resources
(B) Assimilates waste
(C) Land degradation
(D) Provides aesthetic services

Read the following statements carefully:

Statement 1: Great Proletarian Cultural Revolution was introduced in China in the
1950s.
Statement 2: China's growth is mainly contributed by the manufacturing sector.
In the light of given statements, choose the correct alternative from the
following:
(A) Statement 1 is true and Statement 2 is false
(B) Statement 1 is false and Statement 2 is true
(C) Both statements 1 and 2 are true
(D) Both statements 1 and 2 are false

In the first phase of Green Revolution, output was restricted mainly

to_______________
(A) Cereals and Pulses
(B)Wheat and Rice
(C) Cotton and Jute
(D) Jowar and Bajra

During the British rule in India, Indian agricultural output witnessed stagnation due to.
(Choose the correct alternative)
(A) Decline in handicrafts
(B) Drain of Indian wealth
(C) Land settlement
(D) Introduction of railways

Identify, which of the following are associated with the problem of human capital
formation in India?
(i) Brain drain
(ii) Low academic standards
(iii) Rising population
(iv) Changes in social outlook

Alternatives:
(A) (i)and (ii)
(B) (ii) and (iii)
(C) (i), (ii) and (iii)
(D) (i) and (iv)

Read the following statements carefully:

Statement 1: Special Economic Zones (SEZs) policy has led to huge Foreign Direct
Investment (FDI) flow to China.
Statement 2: China's rapid industrial growth was the result of its economic reform in
1981.
In the light of the given statements, choose the correct alternative:

(A) Statement 1 is true and Statement 2 is false

(B) Statement 1 is false and Statement 2 is true
(C) Both statements 1 and 2 are true
(D) Both statements 1 and 2 are false

Read the following statements- -Assertion (A) and Reason (R). Choose one of
the
alternatives given below:
Assertion (A): During the 1980s economic growth rate of Pakistan was more than
that of India.
Reason (R): Pakistan followed the path of mixed economic structure with equal
participation of the public and the private sector.
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

____________is the apex institution which plans and evaluates policies related to
rural credit needs.
(A) Cooperative Credit Societies
(B) Regional Rural Banks
(C) Self Help Groups
(D) NABARD

Read the following statements carefully:

Statement 1: First Five Year Plan of China commenced in the year 1956.
Statement 2: Both India and China adopted Socialist Economy model, following the
USSR.
In the light of the given statements, choose the correct alternative:
(A) Statement 1 is true and Statement 2 is false
(B) Statement 1 is false and Statement 2 is true
(C) Both statements 1 and 2 are true
(D) Both statements 1 and 2 are false

Identify the type of unemployment reflected in the picture below.

(A) Seasonal unemployment
(B) Open unemployment
(C) Disguised unemployment
(D) None of the above

State with valid reason whether the following statement is true or false:
'Self-employed workers are different from hired workers.
True,Self-employed workers run their own business or work on their own without
working under an employer. They decide their own working hours, income, and
[Link] contrast, hired workers work for someone else and receive wages or
salaries in return for their labour. They follow the employer’s instructions and do not
control the [Link], self-employed and hired workers differ in terms of control,
ownership, and source of income, so the statement is true.

"Trade unions play a crucial role in advocating for protecting the rights, interest and
well-being of the workforce, ensuring fair working conditions and representing
employees in labour related matters. "
Explain how trade unions contribute to the protection and welfare of the workforce?

Trade unions are voluntary organisations of workers formed to promote and protect
the interests of workers through collective action. Workers use trade unions as their
representative voice to demand their rights and improve [Link] and working
conditions. The formation of trade unions was a reaction against the mechanisms of
pauperization, low pay long working hours, child labour and generally appalling
working conditions. Thus, the role of trade unions is to fight against poverty of
workers, exploitation and the violation of their basic human dignity and to promote
social justice in the global economy.

"Modernisation as a planning objective creates contradiction in the light of

employment generation.
Defend or refute this statement with valid explanation.
I refute this statement. Modernisation planning objective does not contradict
employment generation, rather as a modernization and employment generation
share a positive relationship in the long-run Modernization refers to the use of new
and modern technology in the production process. This may make some people lose
their jobs in the initial stages, as machines take the place of men. But gradually, the
use of modern technology and input will raise the productivity and consequently the
income of the people, that will further raise the demand for goods and services. In
order to fulfil this increased demand, more opportunities that will lead to higher
employment in production output will be required and there will be more of the
economy. Even in the short-run, modernisation leads to creation of employment
opportunities for skilled workers. If proper training and vocational education is
provided, it will lead to better employment in terms of quality of work and earnings.
Hence, both modernisation and employment generation are not contradictory but are
complementary to each other.

A)In the context of the picture given below, briefly explain the objectives of Great
Leap Forward.

(B) How did the development strategy of China differ from that of India in the early
years after Independence?

(A) Great Leap Forward, in Chinese history, was the campaign undertaken by the
Chinese communists between 1958 and early 1960 to organise its vast population,
especially in large-scale rural communes, to meet China's industrial and agricultural
problems. The Chinese hoped to develop labour-intensive methods of
industrialisation, which would emphasise manpower rather than machines and
capital expenditure. Thereby it was hoped, the country could bypass the slow and
more typical process of industrialisation through gradual accumulation of capital and
purchase of heavy machinery. The great leap forward approach was epitomised by
the development of small backyard steel furnaces in every village and urban
neighbourhood, which were intended to accelerate the industrialisation process.
(B) Agriculture Sector China adopted the Commune System in agriculture, while
India relied on land reforms and the Green Revolution.

"Globalisation has integrated Indian agriculture with international markets, but not
without consequences."
(A) In the light of the above statement, assess how globalisation has affected Indian
farmers in terms of, opportunities and vulnerabilities.
(B) Suggest one policy measure that can help reduce the vulnerabilities of Indian
farmers arising from globalisation.

(A) Globalization has linked Indian agriculture to international markets, offering both
new opportunities and vulnerabilities for farmers.
Opportunities:
(i) Access to Global Markets Farmers could export high-value crops like cotton,
spices, and fruits, allowing them to earn better returns.
ii) New Technology & Inputs Exposure to global markets brought in modern
techniques, seeds, and better irrigation tools, helping improve productivity.
Vulnerabilities
(i) Price Fluctuations Global market dependence exposed farmers to volatile
international prices, making their income unstable.
(ii) Neglect of Subsistence Crops Due to a shift toward export-oriented cash crops,
cultivation of food grains declined, affecting food security and self-sufficiency.

(B) Providing minimum support prices (MSP) for a wider range of crops to protect
farmers from fluctuations in international market prices

"The demographic profile of India after 1921 reflected the harsh realities of colonial
rule."
In light of the above statement, explain any four parameters that reflect India's
demographic condition during that period.

The demographic profile of India after 1921 reveals the adverse impact of colonial
rule on people's health, living standards and well-being.
(i) High Birth and Death Rates Both rates were extremely high, reflecting poor public
health and lack of awareness or medical care.
(ii) Low Life Expectancy Average life expectancy was just 32 years, mainly due to
frequent famines, epidemics, and malnutrition.
iii) High Infant Mortality Rate Infant mortality rate was very high, indicating a lack of
maternal health care and poor nutrition.
(iv) Low Literacy Rate The overall literacy rate was below 16%, showing that the
British made little effort to promote mass education.

(A) "The Indian government has been taking steps for human capital formation, yet
human capital formation is facing problems”. Explain any three such problems of
human capital formation.
(B) 'Education Commission 1964-66 had recommended that at least 6 per cent of
GDP must be spent on education”.How far India has been able to achieve the said
goal?
(A) Problems of human capital formation in India are:

(i) Rapidly rising population adversely affects the quality of human capital formation
in developing countries. It reduces per capita availability of existing facilities. A large
population also requires large investment in education and health. This might divert
the scarce funds of developing countries to production of human capital at the cost of
physical capital.
(ii) The process of human capital formation is a long period policy because skill
formation is time consuming. The process which produces skilled manpower is, thus,
slow.
(iii) Regional and gender inequality lowers the human capital formation levels.
(iv) Migration of highly skilled labour termed as "Brain Drain", adversely affects the
economic development.

(B) Investment in the education system in India has been a woeful failure. The
fact of the matter is that, in 1952 we were spending a meager 0.6% of our GDP on
education that rose to only about 4% in 2014, This has fallen well short of the 6%
target as proposed by the Education Commission, 964. Moreover, throughout this
period the increase in education expenditure has not [Link] and there has
been irregular rise and fall. This shows the apathy of the government towards
investment in the education system. One can imagine, if the recommended 6% p.a.
of the GDP would have been spent properly the present education system would
have reached unforeseen heights.

Read the following text carefully:

In an effective response to an unprecedented emergency (COVID-19 pandemic) that
disrupted most channels of national and international trade, Indian Prime Minister,
under Atmanirbhar Abhiyan, gave a clarion call for the country to become self-reliant.
India in the pre-1991 era also strived for achieving self-reliance and import-
substitution. While it resulted in a diversified economic base for heavy industries
such as steel, coal, petroleum refinery etc., India fell behind the curve on quality,
technology and productivity. Economists attribute these shortcomings to the then
industrial and trade policies, particularly industrial licensing, physical barriers to
import of goods, high tariffs and imperative economic policies. Though, Indian Prime
Minister clarified that the current idea of self-reliance is not about a return to import-
substitution or autarkic isolationism, rather aimed at a quantum jump to the economic
potential of the country by strengthening infrastructure, using modern technologies,
enriching human resources, and creating robust supply chains. To achieve this goal,
policy making needs to address issues and leverage economic opportunities.

On the basis of the given text and common understanding, answer the
following questions:
(a) Discuss briefly the rationale behind choosing 'self-reliance' as a planning
objective for the Indian Economy.
b)State the difference between self-reliance and self-sufficient.
a)Self-reliance means reliance on the domestically available resources for the
growth and development of the economy. More specifically it means non-reliance on
foreign investment and/or foreign aid. It was considered essential to minimise our
dependence on foreign aid/ investment as it often leads to political interference by
the donor countries. Aid is often tied to the project and policies as dictated by the
donor countries.
b Self-reliance refers to the state of non-independence on the rest of the world for
the financial resources. It represents a different way of thinking about the processes
and outcomes of economic development. It is an individual's ability to garner and
hold economic resources in excess of their basic needs.
self-sufficient refers to the state of non-dependence upon the rest of the world for
essential supplies in the domestic country. It is a state of not requiring any aid,
support, interaction or trade with the outside world.