Economics · Sample Paper 1

General instructions

Section A · Introductory Macroeconomics

1. Question 11 mark

   Macroeconomics emerged as a separate branch after

   1. A.the Industrial Revolution
   2. B.the Great Depression of 1929
   3. C.World War II
   4. D.1991 reforms
2. Question 21 mark

   GNP equals GDP plus

   1. A.depreciation
   2. B.net factor income from abroad
   3. C.net indirect taxes
   4. D.subsidies
3. Question 31 mark

   Which of these is included in national income?

   1. A.sale of old furniture
   2. B.transfer payments
   3. C.salary of a teacher
   4. D.purchase of shares
4. Question 41 mark

   M1 consists of

   1. A.currency + demand deposits (+ other deposits with RBI)
   2. B.currency + time deposits
   3. C.only currency
   4. D.post-office savings
5. Question 51 mark

   If the legal reserve ratio is 20%, the money multiplier is

   1. A.2
   2. B.4
   3. C.5
   4. D.20
6. Question 61 mark

   To control inflation, the RBI will

   1. A.lower the repo rate
   2. B.raise the repo rate
   3. C.buy securities
   4. D.lower CRR
7. Question 71 mark

   If MPC is 0.75, the investment multiplier is

   1. A.2
   2. B.3
   3. C.4
   4. D.5
8. Question 81 mark

   MPC + MPS equals

   1. A.0
   2. B.1
   3. C.MPC
   4. D.∞
9. Question 91 mark

   Fiscal deficit minus interest payments is

   1. A.revenue deficit
   2. B.primary deficit
   3. C.budget deficit
   4. D.capital deficit
10. Question 101 mark

    Under a flexible exchange rate, a fall in the value of the rupee is called

    1. A.devaluation
    2. B.depreciation
    3. C.revaluation
    4. D.appreciation
11. Question 113 marks

    Distinguish between final goods and intermediate goods with examples. Why are intermediate goods excluded from national income?

12. Question 123 marks

    Explain the role of the RBI as the lender of last resort and as banker to the government.

13. Question 134 marks

    Calculate national income (NNP at factor cost): GDP at market price ₹2 000 crore; depreciation ₹100 crore; net factor income from abroad −₹20 crore; net indirect taxes ₹150 crore.

14. Question 144 marks

    In an economy, $C = 100 + 0.8Y$ and investment is ₹200 crore. Find the equilibrium income and consumption.

15. OR

    Question 144 marks

    Explain the working of the investment multiplier with a numerical example.

16. Question 154 marks

    Distinguish between the current account and the capital account of the balance of payments, with two items each.

17. Question 166 marks

    Explain the objectives of a government budget. Calculate the revenue deficit and fiscal deficit: revenue expenditure ₹600 crore; revenue receipts ₹450 crore; capital expenditure ₹300 crore; non-debt capital receipts ₹50 crore.

18. Question 176 marks

    What is deficient demand? Explain two fiscal and two monetary measures to correct it.

19. OR

    Question 176 marks

    Explain the process of credit creation by commercial banks with an example (LRR 20%, initial deposit ₹1 000).

Section B · Indian Economic Development

1. Question 181 mark

   At independence, the main occupation of India's workforce was

   1. A.industry
   2. B.agriculture
   3. C.services
   4. D.trade
2. Question 191 mark

   The ‘year of the great divide’ in India's demographic history is

   1. A.1901
   2. B.1921
   3. C.1951
   4. D.1991
3. Question 201 mark

   The Industrial Policy Resolution of 1956 gave the leading role to

   1. A.the private sector
   2. B.the public sector
   3. C.foreign companies
   4. D.cooperatives
4. Question 211 mark

   The Green Revolution mainly benefited

   1. A.wheat and rice
   2. B.pulses
   3. C.cotton
   4. D.jute
5. Question 221 mark

   The New Economic Policy was introduced in

   1. A.1980
   2. B.1991
   3. C.2001
   4. D.1969
6. Question 231 mark

   Which is a source of human capital formation?

   1. A.buying machinery
   2. B.expenditure on education
   3. C.building roads
   4. D.importing goods
7. Question 241 mark

   The apex body for rural credit in India is

   1. A.SIDBI
   2. B.NABARD
   3. C.RBI
   4. D.SEBI
8. Question 251 mark

   Disguised unemployment is mostly found in

   1. A.industry
   2. B.agriculture
   3. C.IT services
   4. D.banking
9. Question 261 mark

   The Chipko movement was aimed at

   1. A.saving rivers
   2. B.protecting forests
   3. C.stopping mining
   4. D.wildlife protection
10. Question 271 mark

    China introduced economic reforms in

    1. A.1949
    2. B.1958
    3. C.1978
    4. D.1991
11. Question 283 marks

    Give three reasons for the economic crisis that led to the 1991 reforms.

12. Question 293 marks

    What is organic farming? Give two benefits.

13. Question 304 marks

    Explain the four goals of India's five-year plans.

14. Question 314 marks

    Distinguish between physical capital and human capital on four bases.

15. OR

    Question 314 marks

    Distinguish between formal and informal sector workers on four bases.

16. Question 324 marks

    Compare India and China on any two growth or human development indicators and explain one reason for China's faster growth.

17. Question 336 marks

    Explain the state of Indian agriculture and industry on the eve of independence.

18. Question 346 marks

    What is sustainable development? Suggest any four strategies for sustainable development in India.

19. OR

    Question 346 marks

    Critically assess the impact of the 1991 economic reforms on India.