TERM 2 XII economics SQP

Q.NO	QUESTIONS	MARKS
1.	Give one example of ‘externality’ which (i)                 reduces welfare of the people.           (ii)      enhances welfare of the people	2
2.	Giving reason, categorize the following into stock and flow: (i) Capital         (ii) Saving         (iii) Gross Domestic Product           (iv) Wealth	2
3.	Define Aggregate Demand and Aggregate Supply. How would you show them in an equation?	2
4.	What is deficient demand in an economy? What is its impact on output, employment and prices?	2
5.	The following table shows the population and worker population ratio for India in 1999-2000. Can you estimate the workforce (urban and total) for India?  Region Estimates of population (in crores) Worker Population Ratio Estimated No. of Workers (in crores) Rural  71.88  41.9 Urban  28.52 33.7  Total 100.40 39.5	2
6.	Define Real Gross Domestic Product and Nominal Gross Domestic Product. Which of these is a better index of welfare of the people and why?	3
7.	(a) Will the following be included in domestic factor income of India? Give reasons for your answer.            (i) Profits earned by a resident of India from his company in Singapore           (ii) Salaries received by Indians working in American Embassy in India (b) Calculate gross value added of factor cost : (i) Units of output gold (units) 1000 (ii) Price per unit of output (Rs.) 30 (iii) Depreciation (Rs.) 1000 (iv) Intermediate cost (Rs.) 12000 (v) Closing stock (Rs.) 3000 (vi) Opening stock (Rs.) 2000 (vii) Excise (Rs.) 2500 (viii) Sales Tax 3500	(1+2)
8.	Define Jobless Growth, GBD and AYUSH.	3
9.	(a) Compare India and Pakistan on the basis of their demography.   (b) Read the following hypothetical text and answer the given question: Infrastructure is often called as the lifeline of the economy of a nation. It comprises of a well established and well knit network of power, telecom, ports, airports, roads, civil aviation, railways and road transport in a country. Countries need adequate infrastructure so that various economic activities in an economy are executed efficiently, smoothly and above all in time. The deficiencies in the of infrastructural needs of a nation cannot be made up through imports rather the best approach is that it must be created within the domestic economy to put it on through the higher growth trajectory. However,building of infrastructure requires large and lumpy investment and has a relatively long gestation period. Due to this fact, infrastructural facilities are either built or run by the government and public sector enterprises and if private sector is permitted to make investment and run infrastructural projects, they must be regulated in order to ensure quality infrastructure to one and all in the society. Over the years, India has built up a vast health infrastructure and manpower at different levels. Highlight the expenditure done on public health infrastructure.	(1+2)
10.	(a) Giving reasons, state whether the following statements are true or false: (a)  Value of APS can never be less than zero. (b)  If MPC is less than one, it means that (1-b) i.e. MPS is always 0.   (b) Calculate Autonomous Consumption expenditure from the following data about an economy which is in equilibrium:  National Income = Rs 1,200 Marginal Propensity to Save = 0.20 Investment expenditure = Rs 100	(1+2)
11.	(a) India’s environment problems pose a “Dichotomy”. Justify. (b) How do the following contribute to the environmental crises in India? Rising population, Illiteracy, Industrialisation, Global warming, Urbanisation, Water contamination.	(2+3)
12.	(a) What can be the minimum value of investment multiplier? (b) When MPC is greater than MPS, the value of investment multiplier will be greater than 5. (True or False) (c) Explain the working of investment multiplier with the help of a table.	5
13.	(a) Compare and analyse the given data of India and China with valid arguments. Annual Growth of Gross Domestic Product (%), 1980-2017 COUNTRY 1980-90 2015-2017 India 5.7 % 7.3 % China 10.3 % 6.8 % Source: Key Indicators for Asia and Pacific 2016, Asian Development Bank, Philippines; World Development Indicators 2018.   (b) Till the 1980s, India, China and Pakistan had similar growth rates and per capita incomes. Also, you might have studied about the importance of human development indicators in the lower classes and the position of many developed and developing countries. Discuss the performance of these three countries keeping in mind any six HD indicators.	(2+3)

ANSWER KEY

Q.NO		Questions		Marks
1.		Give one example of ‘externality’ which (i)            reduces welfare of the people. (ii)           enhances welfare of the people Ans. When the activities of one result in harm to others with no payment made for the harm done, such activities are called negative externalities, e.g. factories produce goods but at the same time creates water and air pollution. Production of goods increases welfare but at the same time pollution reduces the welfare		2
2.		Giving reason, categorise the following into stock and flow: (i) Capital (ii) Saving (iii) Gross Domestic Product (iv) Wealth (C.B.S.E. 2013) Answer: (i) Capital is a stock concept because it is measured at a point of time. (ii) Saving is a flow concept because it is measured over a period of time. (iii) Gross Domestic Product (GDP) is a flow concept because GDP is measured over a period of time. (iv) Wealth is a stock concept because it is measured at a point of time.		2
3.		Define Aggregate Demand and Aggregate Supply. How would you show them in an equation?   Aggregate Demand can be written in the form of the following equation: AD = C + I + G + (X – M) where C – Private Final Expenditure I = Investment Expenditure G = Government Expenditure X – M = Net Exports (Exports – Imports)   Aggregate Supply can be written in the form of the following equation: AS = Y = C + S where; C – Consumption Expenditure S = Savings   Aggregate Supply (AS) refers to the planned aggregate production by the producers during a period of one year. It is equal to the income generated. Aggregate Demand (AD) refers to the total expenditure on consumption and investment by different sectors of the economy.		2
4.		What is deficient demand in an economy? What is its impact on output, employment and prices?   Deficient demand refers to the situation when AD is short of AS corresponding to the full employment level in the economy. i.        Effect on output : Low level of investment and employment implies low level of output. ii.        Effect on employment : Because of deficiency of demand, investment level is reduced. Accordingly, level of employment tends to fall. iii.        Effect on prices : Fall in prices is the immediate consequence of deficient demand		2
5.		The following table shows the population and worker population ratio for India in 1999-2000. Can you estimate the workforce (urban and total) for India?    Region Estimates of population (in crores) Worker Population Ratio Estimated No. of Workers (in crores) Rural 71.88 41.9   Urban  28.52   33.7 Total 100.40 39.5		2
6.		Define Real Gross Domestic Product and Nominal Gross Domestic Product. Which of these is a better index of welfare of the people and why? Ans. (i) Nominal GDP is the market value of all final goods and services produced in a geographical region usually a country, on the other hand, Real GDP is a macroeconomic measure of the value of output, economically adjusted for price changes. The adjustment transforms the Nominal GDP into an index for quantity of total output. (ii) Nominal values of GDP from different time periods can differ due to changes in quantities of goods and services and/or changes in general price levels. Values for Real GDP are adjusted for difference in price levels while figures for Nominal GDP are not adjusted. S.No. Real GDP Nominal GDP 1. Real GDP is the value of GDP at constant prices. Nominal GDP is the value of GDP at current prices.   2. Real GDP measures the value of output economy, adjusted for price changes, Nominal GDP is the market; or money value of all final goods and sen/ices produced in a country during a year.   3. Real GDP includes factor services provided by households, and, final goods and services provided by the firms, Nominal GDP includes factor payments made by the firms for production resources and the payments made by the households for goods and services.   Real GDP is a better index of welfare of the people, when Real GDP rises, flow of goods and services tends to rise, other things remaining constant. This means greater availability of goods per person, implying higher level of welfare		3
7.		(A) Will the following be included in domestic factor income of India? Give reasons for your answer. (i) Profits earned by a resident of India from his company in Singapore (ii) Salaries received by Indians working in American Embassy in India (iii) Profits earned by a resident of India from his company in Singapore will not be included in domestic factor income of India because it is the income of the resident earned abroad. (iv) Salaries received by Indians working in American Embassy in India will be included in domestic factor income of India because it is the income of the normal residents of India, earned within the domestic territory of India. (B) Calculate gross value added of factor cost : (i) Units of output gold (units) 1000 (ii) Price per unit of output (Rs.) 30 (iii) Depreciation (Rs.) 1000 (iv) Intermediate cost (Rs.) 12000 (v) Closing stock (Rs.) 3000 (vi) Opening stock (Rs.) 2000 (vii) Excise (Rs.) 2500 (viii) Sales Tax 3500 Ans. GVAFC = (ixii) + v – vi – iv – vii – viii = (1000X30) + 3000 – 2000 – 12000 – 2500 – 35000 = Rs. 13000		(1+2)
8.		Define Jobless Growth, GBD and AYUSH.     Global Burden of Disease (GBD) is an indicator used by experts to know the number of people dying prematurely due to a particular disease as well as the number of years spent by them in a state of 'disability' owing to the disease.		3
9.		Compare India and Pakistan on the basis of their demography.   Read the following hypothetical text and answer the given question: Infrastructure is often called as the lifeline of the economy of a nation. It comprises of a well established and well knit network of power, telecom, ports, airports, roads, civil aviation, railways and road transport in a country. Countries need adequate infrastructure so that various economic activities in an economy are executed efficiently, smoothly and above all in time. The deficiencies in the of infrastructural needs of a nation cannot be made up through imports rather the best approach is that it must be created within the domestic economy to put it on through the higher growth trajectory. However,building of infrastructure requires large and lumpy investment and has a relatively long gestation period. Due to this fact, infrastructural facilities are either built or run by the government and public sector enterprises and if private sector is permitted to make investment and run infrastructural projects, they must be regulated in order to ensure quality infrastructure to one and all in the society. Over the years, India has built up a vast health infrastructure and manpower at different levels.   Highlight the expenditure done on public health infrastructure.   10.17, Pg 8.16		(1+2)
10.		(A) Giving reasons, state whether the following statements are true or false: (a)  Value of APS can never be less than zero. (b)  If MPC is less than one, it means that (1-b) i.e. MPS is always 0.   False. The value of APS can be less than zero. APS can be negative in situations when saving is negative or when consumption is greater than income.   False. b stands for MPC. So, when b is less than 1, evidently 1-b is positive or 1-b>0 (B) Calculate Autonomous Consumption expenditure from the following data about an economy which is in equilibrium:  National Income = Rs 1,200 Marginal Propensity to Save = 0.20 Investment expenditure = Rs 100   Calculation of Autonomous Consumption (C¯¯¯¯)(C¯):Given, 1.     National Income (Y) = Rs 1,200 2.     Investment Expenditure (I) = Rs 100, 3.     Marginal Propensity to Save (MPS) = 0.20 Calculation of Marginal Propensity to Consume (MPC or b) = 1 – Marginal Propensity to Save(MPS) =1-0.20 = 0.80 ∴∴ MPC = 0.80 Also, Y = C + I, or Y =C¯¯¯¯+bY+I=C¯+bY+I ….. (i) ∵C=C¯¯¯¯+bY∵C=C¯+bY On substituting the given variables in equation (i), we get 1,200=C¯¯¯¯+080×1,200+1001,200=C¯+080×1,200+100 1,200=C¯¯¯¯+960+1001,200=C¯+960+100 =C¯¯¯¯+1,060=C¯+1,060 ∴C¯¯¯¯∴C¯= 1,200 – 1,060 = Rs 140 ∴∴ Autonomous consumption expenditure (C¯¯¯¯)=Rs 140		(1+2)
11.		(A) India’s environment problems pose a “Dichotomy”. Justify. (B) How do the following contribute to the environmental crises in India? Rising population, Illiteracy, Industrialisation, Global warming, Urbanisation, Water contamination. 9.17 pg 9.6		(2+3)
12.		(a) What can be the minimum value of investment multiplier? (b) When MPC is greater than MPS, the value of investment multiplier will be greater than 5. (True or False)   The minimum value of investment multiplier can be one.   False. When MPC is greater than MPS, the value of investment multiplier will be greater than 2. Higher the value of MPC, higher will be the value of investment multiplier. For all the values of MPC > MPS, the value of investment multiplier will lie between 2 and infinity.   (c) Explain the working of investment multiplier with the help of a table. Answer: Investment multiplier (K) expresses the relationship between the final change in income and the initial change in investment It is estimated as the ratio of change in income due to change in investment A. change in investment causes a ‘multiple’ change in the output. K=ΔlΔYΔI=K×ΔY Assume that the MPC is 4/5. Further, suppose that there is an increase in investment worth ₹ 100, which results in the construction of a new building. This processes can be shown with the help of following table:   Time Period Increase in crores Initial in Investment Expenditure Change in Income Induced Change in Consumption (MPC = 0.8) Saving (in crores) 1. 100 100 80 20 2. — 80 64 16 3 — 64 51.2 12.8 4. — 51.2 49.96 10.24 5. — 49.96 32.77 8.19 6. — 32.77 26.22 6.55 .. — x x x .. — . . . .. — . . . Total 500 400 100 Here MPC = 0.8 Thus investment multiplier (k) = 1MPS Thus =11−0.8=10.2=5		5
13.		Compare and analyse the given data of India and China with valid arguments. Annual Growth of Gross Domestic Product (%), 1980-2017 COUNTRY 1980-90 2015-2017 India 5.7 % 7.3 % China 10.3 % 6.8 %   Source: Key Indicators for Asia and Pacific 2016, Asian Development Bank, Philippines; World Development Indicators 2018.   10.17 Till the 1980s, India, China and Pakistan had similar growth rates and per capita incomes. Also, you might have studied about the importance of human development indicators in the lower classes and the position of many developed and developing countries. Discuss the performance of these three countries keeping in mind any six HD indicators. 10.9		(2+3)