## ECONOMICS

Please check that this question paper contains 11 printed pages.
Code number given on the right hand side of the question paper should be
written on the title page of the answer-book by the candidate.
Please check that this question paper contains 24 questions.
Please write down the Serial Number of the question before
attempting it.
15 minute time has been allotted to read this question paper. The question
paper will be distributed at 10.15 a.m. From 10.15 a.m. to 10.30 a.m., the
students will read the question paper only and will not write any answer on

Time allowed : 3 hours Maximum Marks : 80

General Instructions :
(i) All questions in both the sections are compulsory.
(ii) Marks for questions are indicated against each question.
(iii) Question Nos. 1 – 4 and 13 – 16 are very short-answer questions carrying
1 mark each. They are required to be answered in one sentence each.
(iv) Question Nos. 5 – 6 and 17 – 18 are short-answer questions carrying
3 marks each. Answers to them should normally not exceed 60 words
each.
(v) Question Nos. 7 – 9 and 19 – 21 are also short-answer questions carrying
4 marks each. Answers to them should normally not exceed 70 words
each.
(vi) Question Nos. 10 – 12 and 22 – 24 are long-answer questions
carrying 6 marks each. Answers to them should normally not exceed
100 words each.
(vii) Answers should be brief and to the point and the above word limits
should be adhered to as far as possible

SECTION A

1.State one example of positive economics.
2.Define fixed cost.
3.When the Average Product (AP) is maximum, the Marginal Product
(MP) is : (Choose the correct alternative)
(a) Equal to AP
(b) Less than AP
(c) More than AP
(d) Can be any one of the above
4.When the total fixed cost of producing 100 units is RS 30 and the average
variable cost RS 3, total cost is : (Choose the correct alternative)
(a) RS 3
(b) RS 30
(c) RS 270
(d) RS 330
5.Explain the central problem of ‘‘for whom to produce’’.
OR
Explain the central problem of ‘‘choice of technique’’.

6.What is meant by inelastic demand ? Compare it with perfectly inelastic
demand.

7.Given the price of a good, how will a consumer decide as to how much
quantity to buy of that good ? Explain.
OR
What is Indifference Curve ? State three properties of indifference
curves.

8.When the price of a commodity changes from RS 4 per unit to RS 5 per
unit, its market supply rises from 100 units to 120 units. Calculate the
price elasticity of supply. Is supply elastic ? Give reason.

9.What is meant by price ceiling ? Explain its implications.
10.Explain the conditions of consumer’s equilibrium using Indifference
Curve Analysis.
11.Explain the conditions of producer’s equilibrium in terms of marginal
revenue and marginal cost.
12.State three characteristics of monopolistic competition. Which of the
characteristics separates it from perfect competition and why ?
OR
Explain the implications of the following :
(a) Freedom of entry and exit of firms under perfect competition
(b) Non-price competition under oligopoly

SECTION B

13.Which of the following affects national income ? (Choose the correct
alternative)
(a) Goods and Services tax
(b) Corporation tax
(c) Subsidies
(d) None of the above

14 .Define money supply.
15.The central bank can increase availability of credit by : (Choose the
correct alternative)
(a) Raising repo rate
(b) Raising reverse repo rate
(d) Selling government securities
16.Why does consumption curve not start from the origin ?
17.Which among the following are final goods and which are intermediate
goods ? Give reasons.
(a) Milk purchased by a tea stall
(b) Bus purchased by a school
(c) Juice purchased by a student from the school canteen
OR
Given nominal income, how can we find real income ? Explain.
18.Define multiplier. What is the relation between marginal propensity to
consume and multiplier ? Calculate the marginal propensity to consume
if the value of multiplier is 4.
19.Explain the role of the Reserve Bank of India as the ‘‘lender of last
resort’’
20.What is meant by inflationary gap ? State three measures to reduce this
gap.
OR
What is meant by aggregate demand ? State its components
21.The value of marginal propensity to consume is 0.6 and initial income in
the economy is RS 100 crores. Prepare a schedule showing Income,
Consumption and Saving. Also show the equilibrium level of income by
assuming autonomous investment of RS 80 crores.
22.Explain the meaning of the following :
(a) Revenue deficit
(b) Fiscal deficit
(c) Primary deficit
OR
Explain the following objectives of government budget :
(a) Allocation of resources
(b) Reducing income inequalities

23.(a) Explain the impact of rise in exchange rate on national income.
(b) Explain the concept of ‘deficit’ in balance of payments.
24.Calculate (a) Net National Product at market price, and (b) Gross
Domestic Product at factor cost :
(RS in crores)
(i) Rent and interest 6,000
(ii) Wages and salaries 1,800
(iii) Undistributed profit 400
(iv) Net indirect taxes 100
(v) Subsidies 20
(vi) Corporation tax 120
(vii) Net factor income to abroad 70
(viii) Dividends 80
(ix) Consumption of fixed capital 50
(x) Social security contribution by employers 200
(xi) Mixed income 1,000

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