CBSE Class 12 Economics Paper Answer key 2024

CBSE Class 12 Economics paper answer key 2024

Macro

Unlocking the secrets of Class 12 Economics board paper with our comprehensive answer key. Navigate with clarity and ace your exams! #Economics #BoardExams

Ques 11 Autonomous 

These refer to international economic transac-tions that take place due to some economic motives like earning income and profit maximisation. They have nothing to do with foreign exchange payments. Since such transactions are independent of the state of the country’s balance of payment, i.c. irrespective of whether BoP is favourable or unfavourable, they are, therefore, called autonomous items. These items are generally called ‘above the line items’ in BoP. Such items may involve movement of goods across the border in the form of export and import of goods and services.

(b) Accommodating Items in BoP

These refer to transactions that take place to cover deficit (or surplus) arising from autonomous transactions. These items are also called ‘below the line items’. Mind, accommodating items do not cause movement of goods and services across the border. They relate to the movement of Official Reserves with RBI to correct imbalance in BoP. Because of government financing, official settlements are seen as accommodating items to keep the BoP identity. Autonomous receipts and autonomous payments give rise to either deficit or surplus in balance of payments. To meet deficit, the govt. may borrow from abroad or make withdrawls from foreign exchange reserves. The Central Bank may use surplus to purchase foreign securities, foreign currency or gold which may increase official reserve of foreign exchange. The official settlement approach is based on the assumption that monetary authority is the ultimate financier of any deficit in BoP or the ultimate recipient of any surplus.

(a) Disposition (Expenditure) of income on the purchase of goods and services

Three Phases in Circular Flow of National Income

There are three different phases in circular flow of national income, viz. production, income and expenditure. They represent three related aspects, namely production (i.e., generation of income), distribution (of income) and disposition (of income, i.e., expenditure). How? Production of goods and services is the result of combined efforts of factors of production (land, labour, capital and enterprise). The net output emerging from production process gets distributed as remuneration in the form of money income (rent, wages, interest and profit) among factors of production for rendering productive service in the production of output. Thus, production generates income. Production flow gives rise to income flow. With this income factors of production purchase goods and services for final consumption and investment. In this way, income creates expenditure or income flow gives rise to expenditure flow. In this way, income is generated, distributed and spent.

Ques 13 

Banker’s Bank and Supervisor: There are usually hundreds of banks in a country. There should be some agency to regulate and supervise their proper functioning. This duty is discharged by the Central Bank, which acts as the banker’s bank in the following three capacities:

Ques 14

Boosting public investments with a defence project of 40,000 crore in India would likely have several impacts on the economy:

1. Income: The injection of funds into the economy would likely lead to increased incomes for various stakeholders involved in the defence project, such as workers, suppliers, and contractors. This increased income would result in higher purchasing power and potentially stimulate consumption spending in other sectors of the economy as well.

2. Employment: The defence project would create employment opportunities directly within the defence sector, including engineers, technicians, and labourers involved in construction, manufacturing, and maintenance. Additionally, there could be indirect employment generated in related industries such as transportation, logistics, and services. Overall, the project would contribute to reducing unemployment rates and increasing workforce participation.

3. Output: The boost in public investments would lead to an increase in the production and output of goods and services related to the defence project. This includes military equipment, infrastructure, and support services. The increased output would positively contribute to the Gross Domestic Product (GDP) of the country, potentially leading to overall economic growth.

However, it’s essential to consider the opportunity cost of allocating such a significant amount of resources to the defence project. This could divert funds away from other sectors like healthcare, education, or infrastructure development, potentially impacting their growth and development. Additionally, the efficiency and effectiveness of the defence project in achieving its objectives would also influence its overall impact on the economy.

Ques15 

When bank rate/repo rate is increased, market rate of interest (interest rate charged by the commercial banks from their borrowers) is also increased. This lowers demand for credit from the commercial banks by the investors and the households. This leads to a fall in investment expenditure and consumption expenditure, implying a fall in aggregate demand. When aggregate demand falls, credit supply of the commercial banks is obviously reduced. This combats inflation, On the other hand, when bank rate/repo rate is decreased, market rate of interest is also decreased. This increases demand for credit from the commercial banks by the investors and the households. This leads to a rise in investment expenditure and consumption expenditure, implying a rise in aggregate demand. When aggregate demand rises. banks are induced to increase their credit supply. This combats deflation.

(i) It is the Custodian of their cash reserves. Banks of the country are required to keep a certain percentage of their deposits with the Central Bank; and in this way the Central Bank is the ultimate holder of the cash reserves of commercial banks.

(ii) The Central Bank is Lender of Last Resort: Whenever banks are short of funds, they can take loans from the Central Bank and get their trade bills discounted. The Central Bank is a source of great strength to the bank- ing system.

(iii) It acts as a Clearing House for its member banks. Thus, it is a bank of central clearance, settlements and transfers. Its moral persuasion is usually very effective so far as commercial banks are concerned.

16. (b) Primary deficit is the difference between fiscal deficit and interest payment. It is estimated as under:

Primary Deficit – Fiscal deficit – Interest payment

PDFD-IP

(Here, PD Primary deficit, FD = Fiscal deficit, IP = Interest payment.)

Primary deficit shows government borrowing exclusively for purpose of funding the current year deficit. It does not include borrowing for the payment of interest on the accumulated national debt

Ques17 (a)

Steps Involved

The following are the main steps involved in estimating national income by income method:

(i) Identify enterprises which employ factors of production (land, labour, capital and enterprise).

(ii) Classify factor payments into various categories like rent, wages, interest, profit and mixed income (or classify factor payments into compensation of employees, mixed income and operating surplus).

(iii) Estimate amount of factor payments made by each enterprise.

(iv) Sum up all factor payments made within domestic territory to get Domestic Income (NDP at FC).

(v) Estimate net factor income from abroad which is added to Domestic Income to derive National Income.

Ques17 (b) 

Externalities: Externalities refer to good and bad impact of an economic activity without paying the price or penalty for that. There are both positive and negative externalities. Positive externalities occur when, for example, Mr. X maintains a beautiful garden and Mr. Y (neighbour of Mr. X) enjoys it. It adds to welfare of Mr. Y but he does not pay for it.

Micro 

28. (a) Modernisation is the change in the institutions and structures to improve economic growth. It not only leads to an increase in production, but also improves the quality of output. Use of new machines, change in social outlook such as giving equal rights to women and changes in social and cultural life are all part of modernisation. When people and methods of production improve, or modernisation takes place; then economic growth is faster.

28. (b) Subsidy means providing inputs to farmers at concessional rates that are lower than the market rates. During 1960s, in order to adopt new technology, HYV seeds and use of modern fertilisers and insecticides, farmers were provided inputs at a subsidised rate.

The following arguments are given in favour of subsidy:

(a) Subsidy is generally provided to the poor farmers with the motive of reducing inequality of income between rich and poor farmers.

(b) Subsidy was basically an incentive for the farmers to adopt modern techniques and vital inputs like fertilisers, HYV seeds, etc. The subsidy was provided so that the farmers might not hesitate to use modern techniques.

(c) Subsidy is very important for marginal land holders and poor farmers who cannot avail the essential farm inputs at the ongoing market rate.

The following arguments are given against subsidy:

(a) Subsidies are also given to the farmers who do not need them. This often leads to the misallocation of the scarce resources.

(b) It is generally argued that subsidy favours and benefits fertiliser industries more than the farmers.

(c) Subsidies may lead to the wastage of precious resources.

Hence, we can conclude that although subsidies are useful and necessary for poor farmers they put an excessive burden on the scarce finances of the government. Allocation of subsidies to the farmers who need it most is required.

29. 29. Abolishing the Intermediaries: The prime focus of land reforms was to abolish intermediaries like Zamindars, Jagirdars, etc. There were many steps undertaken to make the tillers, the owners of the land

Ques30. (a) (i) Worker-Population ratio is defined as the proportion of population that is actively contributing to the production of goods and services. It is measured by the ratio between the country’s workforce and its total population. The higher the worker-population ratio, the higher is the engagement of people in the productive activities and vice-versa. Dividing the total work force by the population and multiplying by 100 gives the worker-population ratio. 

Ques30. (a) (ii) Training refers to the act of acquiring skills, knowledge and competency required to perform a particular job efficiently and effectively. It keeps the workers well informed, upgrades their skills and improves their expertise. In-service training programmes, motivational sessions and yoga and exercise sessions are some examples. On-the-job training is the most effective kind of training to a trainee, imparting him the technical skills and know-how at the actual work site. Training sessions motivate workers and guide them to live a healthier life. They improve efficiency, effectiveness and competency at work.

A well-developed information system facilitates human capital formation as it keeps workers updated on new developments in their field, the latest innovations and upcoming areas of work. In this manner it helps in development of human capital. Provision of information and counselling centres, Internet services and advertisement in newspapers, magazines and radio and television are a few examples through which information is made available.

Ques30. (b) (i) Green Revolution or the New Agricultural Strategy (NAS) aimed at improving agricultural productivity by application of modern technology with the use of new high yielding variety (HYV) seeds, irrigation, chemical fertilisers and pesticides. In 1966, the NAS was put into practice as a package approach to agriculture in five foodgrains, namely wheat, rice, jowar, bajra and maize. Collectively these steps are known as Intensive Area Development Programme (IADP). HYV seeds are also known as ‘miracle seeds’.

With the promotion of new technology, the government also established regulated markets, so the farmers would be encouraged to sell their excess produce in the market and get reasonable returns. The surplus sold in the market by any producer is known as marketed surplus and is responsible for the increase in supply of goods in the market. In the case of foodgrains, the increased marketed surplus led to a fall in the prices of foodgrains and the low income group consumers benefited immensely. The government was able to build large stocks of foodgrains and was prepared for any emergency.

30. (b) (ii) Casual workers refer to those workers who do not work throughout the year. They only work for a few months. Casual workers are not hired on a regular basis. They do not enjoy social security benefits like provident fund, gratuity, etc. They are generally unskilled workers. For example: workers working at a construction site.

31. (a) (b) (i) Agricultural Sector: The share of agricultural sector in GDP had declined from 36 per cent to 21 cent in the period 1980-81 to 2001-02 while services had accorded an increase to 54 per cent from 39 per cent in the same period. The poor performance of the agricultural sector had been attributed to a decline in public investment in infrastructure such as irrigation and transport, decline in farmers’ subsidy and greater competition from international arena due to withdrawal of minimum support prices. Production for exports had reduced the domestic supply and had, therefore, pushed up the prices of foodgrains.

(ii) Industrial Sector: Share of industrial sector in GDP has declined from 25 to 22 per cent in period 1980-81 to 2001-02. Much of the decline in industrial growth was due to the opening up of the economy to international competition. Domestic goods had been replaced by cheaper and better quality imported ones. Employment in the organised sector had fallen. Though developed countries were approaching India as a vast market for their goods, Indian goods were unable to reach other markets due to various non-tariff barriers.

(a) The important demographic indicators of Indian, China and Pakistan are discussed as below.

Demographic Indicators:

The important demographic indicators are as follows:

(a) Total Population: China is the largest populated country in the world followed by India.

(b) Annual Growth Rate of Population: Although China is the largest populated country yet a strong positive point for China is that, its annual growth rate of population is lower that of India and Pakistan. With such a high growth rate, in the forthcoming decades, India will surpass the total population of China.

(c) Density of Population: In spite of the fact that China is highly populated and geographically occupying the largest area among the three nations, its density of population is the lowest. It is as low as 138 persons per square kilometre of area compared to 358 and 193 persons in India and Pakistan respectively. The lower the degree of density of population, the lower is the pressure on the country’s natural resources and the higher is the probability of sustainable development.

(d) Sex Ratio: This ratio counts the number of females per 1000 males. The sex ratios in all the three countries are almost same with China having a marginally higher sex ratio of 937 females per 1000 males. This depicts the low economic and social status of women in India and Pakistan.

(e) Fertility Rate: This rate refers to the number of children a woman gives birth to during her lifetime. China enjoys an upper hand in this case. The fertility rate of Chinese woman is the least. This implies that in India and Pakistan a woman usually gives birth to a higher number of children in her lifetime. This is the most important concern for both India and Pakistan, as with such a high fertility rate, population in the coming decades will surpass that of China.

(f) Urbanisation: Lastly, China is comparatively more urbanised than India and Pakistan. The rate of urbanisation in China is 6.1% while that in India and Pakistan is 27.8% and 33.4% respectively. The degree of urbanisation depicts the standard and quality of living of people of a particular country. Also, this confirms the shift in the economic structure of an economy. Higher degree of urbanisation reveals higher industrialisation and development of tertiary sector in the economy. 

Thus to sum up, although China is the largest populated country yet its other demographic indicators are stronger than those of both India and Pakistan.

32. 32. (b) Liberty indicator is an index used to measure the participation of the people in taking decisions. Some examples of liberty indicators are the measures of the extent of the Constitutional Protection Rights given to the citizens and the extent of independence of the Judiciary and Rule of Law.

(a) It is an undisputed fact that sustainable development is a process to be practised as a daily life activity. Sustainable development prospers when: (i) environmental pollution is combated, and (ii) environmental degradation is stopped. In our daily life activity, we can contribute to tackling environmental pollution when: (i) we stop littering the roads and public places, (ii) we maintain our vehicles according to the specified standards, so that emission of smoke is minimised, and (iii) we start relying more on public transport, so that vehicular traffic is reduced and pollution is minimised. Likewise, we can contribute to minimising environmental degradation when: (i) we recycle the waste, particularly of water and paper, (ii) we refrain from tree-felling to obtain fire wood, (iii) we do not build our residential houses in unauthorised areas, and (iv) as producers we use only the environment- friendly techniques relating to production, and disposal of the industrial waste.

Briefly, we should not stretch our environment to serve us beyond its capacity. If we do, sustainable development would remain a far cry.

Ques 33 b

The G20 countries are looking for guidance from the One Health Quadripartite in operationalizing One Health (OH) approaches. In 2022, the Quadripartite supported the Indonesian G20 Presidency by developing the Lombok G20 One Health Policy Brief. Multiple consultations with governments and input from the One Health High-Level Expert Panel helped identify seven recommendations for countries to scale up this integrated approach: 

1. Raise awareness and advocacy for OH priorities
2. Identify gaps and opportunities
3. Improve OH governance
4. Support OH funding or investment
5. Use the OH Joint Plan of Action as a blueprint for action
6. Implement the OH approach in all relevant policies
7. Facilitate OH research, knowledge and capacity

During this time, WHO One Health Initiative conjointly with WHO Healthier Population Division Office developed and finalized a self-assessment questionnaire for countries to evaluate their One Health implementation. One of the biggest barriers across the countries is the lack of centralized One Health general funding, with budgets for One Health relevant activities still mostly distributed through specific ministries. Limited financing between disease events restricts continuing action and development, with each new response often having to start from scratch.

The World Bank estimates that between $10.3 and 11.5 billion a year is needed to implement One Health globally. This will require all forms of financing, from multilateral development banks, international financial institutions, domestic resources and the private sector. Quadripartite is investigating financing mechanisms and institutions and advocating for increased funding at the country level. Both the OH Joint Plan of Action and the G20 Lombok Policy Brief emphasize support to low- and middle-income countries to strengthen One Health approaches to pandemic prevention, preparedness and response to prevent the socioeconomic fallout seen with COVID-19.

34. (a) (i) The following are some of the obstacles that hinder the mechanism of agricultural marketing:

(i) Farmers are vulnerable to defective weighing techniques.

(ii) Farmers are often ill-informed about market prices and market conditions. Being ignorant,

farmers are forced to sell their products at lower prices.

(iii) The farmers lack access to proper storage facilities to store their produce.

(iv) The farmers cannot avail agricultural credit and, therefore, are exploited by the moneylenders.

(a) (ii) IT enables to provide and store data related to the past conditions and providing inputs for policy decision and for adopting various corrective measures. For example, with the help of IT, weather conditions can be forecast. If, for example, there is a probability of crop failure, then preventive measures can be taken to avoid or mitigate the impact of food insecurity. Information technology

facilitates the storage and dissemination of information on emerging technologies, weather and soil conditions for growing various crops, etc, which ease the decision-making process.

Nowadays, the farmers can consult Kisan Call Centres and various web sites providing valuable information regarding measures to improve farm productivity and quality of farm inputs, seeds, fertilisers and various modern techniques. It acts as a tool for identifying the experts on food security and sustainable development.

IT sector also generates employment opportunities in the backward areas via developing ‘info kiosk’ (i.e. PC with Internet, scanner, etc.) in the rural areas.

(b) (i) Formal Sector refers to the organised sector of the economy. It includes government departments, public enterprises and private establishments that hire 10 or more workers. Workers of the formal sectors enjoy social security benefits and also they remain protected by the labour laws. Work conditions are good for employees. On the other hand, the informal sector is an unorganised sector of the economy. People engaged in this sector do not enjoy any social security benefits and do not have any trade unions and, consequently, have low bargaining power. They are protected only by the Minimum Wages Act. Creating more jobs in the formal sector will not only absorb workforce from the informal sector but also help reduce poverty and income inequalities.

(b) (ii) (a) Regulated Markets: Regulated markets are those where the sale and purchase of the products are monitored by the Market Committee. This Market Committee consists of farmers, government agents and traders. Such committees ensure that the farmers and the consumers are receiving fair prices in exchange of their products.

(b) Infrastructure Development: Indian government provided cold storages and warehouses that help the farmers to sell their products at the time when the price is attractive. Also, railways offer subsidised transport facilities to the farmers. This enables the farmers to bring their product to urban areas where they can earn reasonable profits.

(c) Co-operative Agricultural Marketing Societies: The government also started co-operative marketing under which the farmers get access to fair prices. This is due to the better and enhanced bargaining power of the farmers via collective sale in the market.

(d) MSP Policy: Minimum Support Price is a minimum legislated price that a farmer may charge in exchange for his products. The need for such assurance to the farmers is of immense importance as farming in India is subject to many uncertainties.

.CUET – CUET