Class 12 Economics Sample Paper Term 1 With Solutions Set B

Please refer to Class 12 Economics Sample Paper Term 1 With Solutions Set B below. These Class 12 Economics Sample Papers will help you to get more understanding of the type of questions expected in the upcoming exams. All sample guess papers for Economics Class 12 have been designed as per the latest examination pattern issued by CBSE. Please practice all Term 1 CBSE Sample Papers for Economics in Standard 12.

Sample Paper Term 1 Class 12 Economics With Solutions Set B

Section A

1. The amount which is printed on the currency notes in India is referred to as its ………… .
(a) denominated value
(b) face value
(c) intrinsic value
(d) Both (a) and (b)

2. Read the following statements carefully and choose the correct alternative from the following.
Statement I Disinvestment leads to transfer of ownership from the public sector to private sector in a given period of time.
Statement II The process of acquiring rights of public sector enterprises by private company is known as privatisation.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

3. Choose the correct pair from given below
Column I                                                      Column II
A. Demand deposit with banks             (i) Fixed maturity
B. Legal tender                                      (ii) Legal mode of payment
C. Bank money                                      (iii) Currency notes
D. Legal reserve ratio                           (iv) Cash reserve ratio
Codes
(a) A–(i)
(b) B–(ii)
(c) C–(iii)
(d) D–(iv)

4. In India, using which of the following modes, one cannot make payments more than ₹ 1,000 in one transaction at a given point of time?
(a) Currency notes with public
(b) Currency coins with public
(c) Debit or credit cards
(d) None of these

5. Government budget is ………… estimated statement of receipts and expenditures prepared by the government.
(a) a monthly
(b) a quarterly
(c) a half-yearly
(d) an annual

6. As per the recommendations of task force on the projection of minimum needs and effective consumption demand, the poverty line set for the rural areas was equal to …………… .
(a) ₹ 816
(b) ₹ 828
(c) ₹ 1,000
(d) ₹ 1,020

7. Read the following statements carefully and choose the correct alternative from the following.
Statement I Indian banking system is based upon the fractional reserve system where a fixed amount is reserved with the central bank to circulate any amount of currency into the system.
Statement II Central bank prints currency regularly without considering the economic condition of the country.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

8. India poor health state during colonial rule was attributed to ………… .
(a) lack of public investment in health infrastructure
(b) occurrence of frequent famines
(c) Both (a) and (b)
(d) None of the above

9. Read the following statements carefully and choose the correct alternative from the following.
Statement I Import of machinery is recorded in the capital account of BoP as it impacts the assets of the country.
Statement II Purchase of machinery is considered as an asset for the country.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

10. ………… form of capital is non-marketable in nature.
(a) Physical
(b) Fixed
(c) Human
(d) None of these

11. Indian economy showed remarkable resilience to the global financial crisis in 2008 due to ………… .
(a) proper planning by the government
(b) active participation of central bank
(c) trust of foreign investors on Indian economy
(d) All of the above

12. Mohan and Rohan are two friends living in a remote place in the outskirts of Jharkhand. Both of them studies in the same government school where they get free education under ‘education for all’ programme. Mohan’s father owns a small plot of land which he cultivates with the help of his family members and able to meet family expenditures, while Rohan’s father is a landless labourer, who finds it difficult to get work due to stiff labour market. In your opinion, who is in the state of absolute poverty?
(a) Mohan’s family
(b) Rohan’s family
(c) Both the families
(d) Can’t be predicted from the above information

13. …………… is a non-recurring expenditure of government budget.
(a) Revenue expenditure
(b) Capital expenditure
(c) Planned expenditure
(d) None of the above

14. Read the following statements carefully and choose the correct alternative from the following.
Statement I The ministry of finance, government of India holds the power to print currency notes in India.
Statement II Central bank in India doesn’t mint the limited tender money.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

15. Tax and non-tax revenues form part of which of the following components of government budget?
(a) Revenue budget
(b) Capital budget
(c) Both (a) and (b)
(d) Neither (a) nor (b)

16. India is generally seen as a country with huge burden of population. High growth rate of population is one of the major causes of almost all the problems in the country. However, many international agencies have seen India as a knowledge hub in coming times. Which of the following reasons can be attributed for the same?
(a) Availability of skilled manpower
(b) Quality of education
(c) Public investment in human development
(d) All of these

17. ………… is not a source of capital receipts of government budget.
(a) Escheat
(b) Disinvestment
(c) Foreign direct investment
(d) Both (b) and (c)

18. During January to November 2007, India experienced a rise in overseas investment amounting to a net $18.8 billion of stocks and bonds. This will be recorded in which account of balance of payments?
(a) Current account
(b) Capital account
(c) Both (a) and (b)
(d) Neither (a) nor (b)

19. ………… refers to the ceiling on the volume of imports of any particular commodity.
(a) Tariff
(b) Quota
(c) Limit
(d) None of these

20. The impact of partition of the country was most seen in which of the following industries?
(a) Silk
(b) Cotton
(c) Jute
(d) Iron and steel

21. The GST levied on the intra-state supply of goods and services are known as ……… .
(a) Central GST
(b) State GST
(c) Integrated GST
(d) None of these

22. Read the following statements carefully and choose the correct alternative from the following.
Statement I The process of human development must be comprised of morality of people.
Statement II Human development is a broader aspect which is comprised of human resources and human capital.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

23. Indian government protected the domestic industries from foreign competition during initial phase of industrialisation by using …………… .
(a) Tariffs
(b) Quotas
(c) Both (a) and (b)
(d) Neither (a) nor (b)

24. ………… is given as a benefit of advance payment of tax made by the producer under the GST regime.
(a) Subsidy
(b) Input tax credit
(c) Tax holiday
(d) All of these

Section B

25. Assertion (A) The central bank’s ability to create currency in the economy depends upon the legal reserve ratio.
Reason (R) In normal banking system, banks circulate the money received from the public in the form of deposits.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

26. Read the following statements carefully and choose the correct alternative from the following.
Statement I People who always remain above poverty line are known as occasionally poor.
Statement II Landless labourers are the major contributors to the rural poverty.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

27. ………… maintains the record of the reserves of foreign exchange of the country.
(a) Reserve Bank of India
(b) Central Government
(c) Both (a) and (b)
(d) None of these

28. Assertion (A) Government should try to cover its revenue deficit by reducing unnecessary revenue expenditures.
Reason (R) Financing revenue deficit by borrowings increases the burden of repayment on future generations.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

29. Read the following statements carefully and choose the correct alternative from the following.
Statement I Opening of Suez Canal adversely impacted Britain’s foreign trade from India.
Statement II Railways were the most preferred mode of transportation of cargo between countries before independence.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

30. Match the correct pair from the columns given below
Column I                                          Column II
A. Fees and fines                          (i) Direct tax
B. Personal taxes                          (ii) Capital receipt
C. Disinvestment                          (iii) Non-tax revenue
Codes
          A     B      C              A      B     C
(a)    (ii)    (i)    (iii)    (b)    (iii)    (i)    (ii)
(c)    (i)    (iii)    (ii)    (d)    (i)     (ii)    (iii)

31. Assertion (A) Non-tax revenue of the govermment budget is major source of government during the fiscal year.
Reason (R) Govermment allocates resources from the budget for the management of the public sector undertakings.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

32. Choose the correct statement from given below.
(a) Heavy machine made industries faced the major setback during the colonial rule
(b) High infant mortality rate indicates the social backwardness
(c) British government imposed an unified tariff on foreign trade during their rule in India
(d) All of the above

33. Inflow of investment during 2007 leads to ………… in supply of foreign exchange of the country.
(a) increase
(b) decrease
(c) no impact
(d) Either (a) or (b)

34. Assertion (A) As per balance of payment identity, the sumof balance on current account, balance on capital account and official reserve transactions should be equal to zero.
Reason (R) A balanced BoP ensures no movement of foreign exchange between countries during a given period of time.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

35. Choose the incorrect statement from given below.
(a) India’s modern farming technique increased production of wheat and rice
(b) Indian farmers experiences a consistent decrease in the landholdings due the law of inheritance
(c) Seasonal and disguised unemployment are commonly seen in the industrial sector in India
(d) Abolition of intermediaries were one of the main objectives of economic reforms of 1950s

36. Year 1921 is marked as the year of ‘Great divide’. Before this, India experienced ……… death rate.
(a) high
(b) low
(c) constant
(d) None of these

37. Choose the correct pair from given below.
Column I                                                   Column II
A. Green revolution                    (i) Use of natural manures
B. Land reform                           (ii) Institutional changes in the ownership
C. Planning                                 (iii) Economic system
D. Subsidy                                   (iv) Charged for over use of resources
Codes
(a) A–(i)
(b) B–(ii)
(c) C–(iii)
(d) D–(iv)

38. Assertion (A) Goods and services tax is a form of direct taxes, burden of which is unavoidable.
Reason (R) Incidence and impact of taxes lies on different persons for indirect taxes.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

39. ‘‘Human resource management is an important component of economic development of the country. Quality of work life is the perception of employees regarding the relationship between working condition with management. Human resource management performs various functions, among which training and development of employees is one of the vital ones’’. In the light of the above said statement, which of the following is/are the advantage(s) of human resource management?
(a) It minimises the cost
(b) Motivate employees to perform
(c) Enhances productivity
(d) All of the above

40. Assertion (A) Self-help groups have filled the gap between the formal sector lending and informal sector lending.
Reason (R) Agricultural marketing has further intensified the importance of self-help groups by providing proper marketing channels.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

41. WTO headquarter is located in …………… .
(a) Washington
(b) New York
(c) Geneva
(d) Italy

42. Assertion (A) Fixed exchange rate system minimises the fluctuation in the price of foreign currency.
Reason (R) When price of foreign exchange is controlled by the central bank, it becomes more stable.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

43. Which of the following estimates did SD Tendulkar committee use for determining poverty in the country?
(a) Calories consumption
(b) Human development
(c) Monthly per capita expenditure
(d) All of these

44. Assertion (A) Investment in education and health creates both private as well as social benefits.
Reason (R) Government plays an important role in providing education and health in India
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

45. Mortality rate of a county is an indicator of which of the following?
(a) Growth rate
(b) Occupational structure
(c) Demographic profile
(d) All of these

46. Read the following statements carefully and choose the correct alternative from the following.
Statement I India’s foreign exchange reserve fell to the lowest level during 1990’s.
Statement II During 1950 to 1990, India’s highest export category was gems and jewellery.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

47. Assertion (A) Private sector was licensed during 1950s to ensure production of goods for all sections of the society.
Reason (R) Private sector takes less interest in production of goods with huge cost and long gestation period.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

48. Observe the pictorial flow chart given below.

Complete the cycle by choosing appropriate components from the options below.
(a) Disadvantage in education and skills, family in poverty
(b) Family in poverty, disadvantage in education and skills
(c) No education, small family size
(d) None of the above

Section C

Direction :– Read the following case study and answer questions 49 to 54 on the basis of the same.
Today’s business world is very vast and challenging. Due to this situation, Indian business houses are downsizing and outsourcing. In the protected economy, industries and employees were very safe and supported by the government agencies. Due to excessive protection, industries become less productive and inefficient. In this scenario, human resource have been playing dominant role in the industrial field.
After 1991, there were no other option behind excessive protection and when protection has been gradually decreasing then industries have been started Business Process Outsourcing (BPO). In outsourcing, work get it done from external agencies or persons. At international level, outsourcing is one of the convenient businesses because companies can work for 24 hours in the world. Companies getting excellent services from employees and at the same time employees are getting good remuneration from the company. So, both of them i.e., company and employees are getting win-win situation. In a case study, it was found that 6% employees are on regular pay roll and 94% employees are on contractual employees. The turnover is increased from 35% to 65% due to BPO. Production has increased from 33% to 67% because of BPO. Number of accidents are not got affected due to outsourcing.
As per employee’s opinion, outsourcing is less convenient but as per employers’ opinion, outsourcing is more convenient. Due to outsourcing; quality of the products is good, value addition is good, employers trust is good, employers’ confidence is good but relationship value and employees trust is average, at the same time employee’s confidence and safety is low. It was found in this case study that contractor secured 7 marks out of 10 marks, work performance secured 40 marks out of 50, industrial relation secured 7 marks out of 10, environment objectives secured 8 marks out of 10, safety aspect secured 3 marks out of 10 and statutory compliances secured 7 marks out of 10 marks. In total, the sample case study secured 72 marks out of 100 marks and it is a good indication for BPO. In modern cost control era, BPO has become the basic, ‘MANTRA’ of management.
Source “Business Process Outsourcing – A Case Study” Dr. A M Gurav, Kolhapur

49. Assertion (A) India has become a outsourcing destination in the whole world with a wide variety of services being outsourced from India.
Reason (R) The cost of the skilled labour and favourable government policy has led to inflow of foreign capital in recent times.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

50. Read the following statements carefully and choose the correct alternative from the following.
Statement I Outsourcing leads to deterioration in the quality of goods and services. 
Statement II Outsourcing is the fastest mode of increasing production.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

51. Which of the following is the most outsourced service from India?
(a) Voice processing
(b) Record keeping
(c) Film editing
(d) All of these

52. Outsourcing in India has reduced the job security of the workers working in various ………… companies.
(a) national
(b) multinational
(c) Both (a) and (b)
(d) None of these

53. As per the above study, what percent of workers are working as off roll workers?
(a) 6%
(b) 35%
(c) 65%
(d) 94%

54. Choose the most correct statement from given below.
(a) Outsourcing leads to decrease in net cost of production
(b) Outsourcing increases the market reach of the producers
(c) Outsourcing increases the choice for the customers at lower cost
(d) All of the above

Direction :- Read the following case study and answer questions 55 to 60 on the basis of the same.
The Covid-19 pandemic has hit the economy on different fronts over the last eight months, the foreign exchange reserves have risen by over $100 billion when the lockdown was announced in March-end. This jump of 22 per cent has come following a sharp decline in imports alongside strong foreign investment inflows in the second half of the calendar year.
While the forex reserves stood at $469.9 billion in the week ended 20thMarch, 2020, it has risen by $102.8 billion since then and to touch $572.7 billion in the week ended 13th November, 2020. RBI data released on Friday shows that reserves grewby $4.2 billion in theweek ended 13thNovember. Between April and November, while Foreign Portfolio Investments (FPI) amounted to ₹ 1,40,295 crore (nearly $19 billion), the net FDI between April and September aggregated to $22.85 billion. Besides this, a sharp decline in imports of crude oil, electronics and gold due to a lockdown in many parts of the world between March and May, prevented even normal drawdown of reserves.
According to data available with the Petroleum Planning and Analysis Cell under the Ministry of Petroleum and Natural Gas, the net crude oil import declined sharply between April and September this year to $19.3 billion. It was as high as $83.2 billion for the full year 2019-20. Source Indian Express, 23rd August, 2021.

55. The rise in foreign exchange reserves during the lockdown will be recorded as ………… side item.
(a) credit
(b) debit
(c) Either (a) or (b)
(d) Neither (a) nor (b)

56. Which of the following reasons is/are responsible for rise in foreign exchange reserve during the lockdown?
(a) Fall in import of goods
(b) Fall in demand for crude oil
(c) Both (a) and (b)
(d) Neither (a) nor (b)

57. How the decline in demand for crude oil due to lockdown affects the supply of foreign exchange?
(a) Rise
(b) Fall
(c) No change
(d) Either (a) or (b)

58. Assertion (A) Portfolio investments from abroad are recorded as a debit item in the current account of BoP.
Reason (R) Items which impacts assets and liabilities of a country are recorded as a capital account item.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

59. What will be the likely impact for the inflow of foreign investment as mentioned in the above extract, on the balance of payments account?
(a) Surplus in BoP
(b) Deficit in BoP
(c) Surplus in BoT
(d) Deficit in BoT

60. Read the following statements carefully and choose the correct alternative from the following.
Statement I BoP surplus will be balanced by investment abroad from domestic country on account of official reserve transactions.
Statement II In operational sense, BoP need not always balance. 
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect