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Board Paper of Class 12-Commerce 2015 Economics (SET 1) - Solutions

General Instructions:
(i) All questions in both sections are compulsory. However, there is internal choice in some questions.
(ii) Marks for questions are indicated against each question.
(iii) Question No.1-3 and 15-19 are very short answer questions carrying 1 mark each. They are required to be answered in one sentence.
(iv) Question No.4-8 and 20-22 are short answer questions carrying 3 marks each. Answers to them should not normally exceed 60 words each.
(v) Question No.9-10 and 23-25 are also short answer questions carrying 4 marks each. Answers to them should not normally exceed 70 words each.
(vi) Question No.11-14 and 26-29 are long answer questions carrying 6 marks each. Answers to them should not normally exceed 100 words each.
(vii) Answers should be brief and to the point and the above word limit be adhered to as far as possible.




  • Question 2
    If with the rise in price of good Y, demand for good X rises, the two goods are : (Choose the correct alternative)
    (a) Substitutes
    (b) Complements
    (c) Not related
    (d) Jointly demanded VIEW SOLUTION




  • Question 4
    Giving reason, comment on the shape of Production Possibilities Curve based on the following table :
    Good X (units) Good Y (units)
    0 4
    1 3
    2 2
    3 1
    4 0
    VIEW SOLUTION


  • Question 5

    What will be the impact of "Education for All campaign" (Sarv Shiksha Abhiyan) on the Production Possibilities Curve of the Indian economy and why ?

    OR

    What will likely be the impact of large scale inflow of foreign capital in India on Production Possibilities Curve and why ?

    VIEW SOLUTION


  • Question 6
    Why is minus sign attached to the measure of price elasticity of demand of a normal good in comparison to the plus sign attached to the measure of price elasticity of supply ? Explain. VIEW SOLUTION


  • Question 7
    There are no barriers in the way of firms leaving or joining industry in a perfectly competitive market. Explain the significance of this feature. VIEW SOLUTION


  • Question 8
    What is maximum price ceiling ? On what type of goods is it normally imposed ? Use diagram. VIEW SOLUTION


  • Question 9
    A consumer spends Rs 400 on a good priced at Rs 4 per unit. When the price rises by 25 percent, the consumer continues to spend Rs 400. Calculate the price elasticity of demand by percentage method. VIEW SOLUTION


  • Question 10
    What is supply ? Explain the effect of technological progress on supply of a good.

    OR

    What is 'change in supply' ? Explain the effect of tax imposed on a good on the supply of the good. VIEW SOLUTION


  • Question 11
    A consumer consumes only two goods, each priced at Rupee one per unit. If the consumer chooses a combination of the two goods with Marginal Rate of Substitution equal to 2, is the consumer in equilibrium ? Give reasons. Explain what will a rational consumer do in this situation.
     
    OR

    A consumer consumes only two goods X and Y whose prices are Rs 2 and Rs 1 per unit respectively. It the consumer chooses a combination of the two goods with marginal utility of X being 4 and that of Y also being 4, is the consumer in equilibrium ? Give reasons. Explain what will a rational consumer do in this situation. Use Marginal Utility Analysis. VIEW SOLUTION


  • Question 12
    What are the different phases in the Law of Variable Proportions in terms of Total Product ? Give reasons behind each phase. Use diagram. VIEW SOLUTION


  • Question 13
    Explain the rationale behind the conditions of equilibrium of a producer. VIEW SOLUTION


  • Question 14
    Market for a good is in equilibrium. Demand for the good "decreases". Explain the chain of effects of this change. VIEW SOLUTION


  • Question 15
    Name any two components of 'aggregate demand'. VIEW SOLUTION


  • Question 16
    If MPC = 0, the value of multiplier is : (Choose the correct alternative)
    (a) 0
    (b) 1
    (c) Between 0 and 1
    (d) Infinity VIEW SOLUTION


  • Question 17
    Primary deficit in a government budget equals : (Choose the correct alternative)
    (a) Interest payments
    (b) Interest payments less borrowings
    (c) Borrowings less interest payments
    (d) None of the above VIEW SOLUTION


  • Question 18
    Which one of these is a revenue expenditure ?
    (a) Purchase of shares
    (b) Loans advanced
    (c) Subsidies
    (d) Expenditure on acquisition of land VIEW SOLUTION


  • Question 19
    Other things remaining the same, when foreign currency becomes cheaper, the effect on national income is likely to be : (Choose the correct alternative)
    (a) Positive
    (b) Negative
    (c) Positive and negative both
    (d) No effect VIEW SOLUTION


  • Question 20
    If the Nominal Gross Domestic Product = Rs 4,400 and the Price Index (base = 100) = 110, calculate the Real Gross Domestic Product. VIEW SOLUTION


  • Question 21
    Give the meanings of 'autonomous' transactions and 'accommodating' transactions in the Balance of Payments Accounts.
     
    OR

    Give the meanings of Balance of Trade and Balance on Current Account of Balance of Payments Accounts. VIEW SOLUTION


  • Question 22
    Giving reasons explain where charity to foreign countries is recorded in the Balance of Payments Accounts. VIEW SOLUTION


  • Question 23
    Explain 'Government's Bank' function of the central bank.

    OR

    Explain 'Bankers' Bank' function of the central bank. VIEW SOLUTION


  • Question 24
    Why do we say that commercial banks create money while we also say that the central bank has the sole right to issue currency ? Explain. What is the likely impact of money creation by the commercial banks on national income ? VIEW SOLUTION


  • Question 25
    An economy is in equilibrium. Calculate Marginal Propensity to Save from the following :
    National Income = 1,000
    Autonomous Consumption = 100
    Investment Expenditure = 200 VIEW SOLUTION


  • Question 26
    Giving reasons explain how should the following be treated in estimation of national income :
    (i) Payment of corporate tax by a firm
    (ii) Purchase of machinery by a factory for own use
    (iii) Purchase of uniforms for nurses by a hospital VIEW SOLUTION


  • Question 27
    What is 'inflationary gap' ? Explain the role of Cash Reserve Ratio in removing this gap.
     
    OR

    What is 'deficient demand' ? Explain the role of 'Margin Requirements' in removing this gap. VIEW SOLUTION


  • Question 28
    Explain the role of government budget in fighting inflationary and deflationary tendencies. VIEW SOLUTION


  • Question 29
    Calculate the Gross National Product at Market Price and Personal Income :
        (Rs crores)
    (i) Wages and salaries 800
    (ii) Personal tax 150
    (iii) Operating surplus 200
    (iv) Undistributed profits 10
    (v) Social security contributions by employers 100
    (vi) Corporate tax 50
    (vii) Net factor income to abroad (−) 20
    (viii) Personal disposable income 1,200
    (ix) Net indirect tax 70
    (x) Consumption of fixed capital 30
    (xi) Mixed income of self-employed 500
    (xii) Royalty 9
    VIEW SOLUTION
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