# Class 12 Economics Sample Paper Term 2 With Solutions Set D

Please refer to Class 12 Economics Sample Paper Term 2 With Solutions Set D 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 2 CBSE Sample Papers for Economics in Standard 12.

## Sample Paper Term 2 Class 12 Economics With Solutions Set D

1. What is the difference between consumer goods and capital goods?
OR
What is the difference between planned and unplanned inventory accumulation? Write down the relation between change in inventories and value added of a firm.

OR
Planned Inventory: It refers to changes in the stock of inventories that have occurred in a planned way.
In a situation of planned inventory accumulation, firm makes plan to raise its inventories.
Unplanned Inventory: It refers to changes in the stock of inventories that have occurred in an unexpected way. In a situation of unplanned inventory accumulation, due to unexpected fall in sales, the firm will have unsold stock of goods.
Value added of a firm (GVA) = Gross value of output produced by the firm – Value of intermediate goods used by the firm.

2. If MPC = 0.4 and change in income is `1,000, what will be change in savings?
OR
Estimate the change in final income if Marginal Propensity to Consume (MPC) is 0.75 and change in initial investment is `2,000 crores.
Answer: 2. MPC + MPS = 1
0.4 + MPS = 1
MPS = 1 – 0.4
MPS = 0.6
MPS = Δs/ΔY
0.6 =ΔS/1, 000
ΔS = 600
OR
MPC = 0.75
Change in investment (ΔI) = Rs.2,000 crores
K = 1/1 −MPC
K = 1/1− 0.75= 4
K =Change in income ΔY/Change in investmentΔI
⇒                                            4=Change in income ΔY/2,000
Change in investment (ΔI) =Rs.=8,000 crore

3. Value of Average Propensity to Save can never be greater than one. Justify the given statement.
Answer: APS + APC = 1
APS = 1 – APC
The saving of a consumer can never exceed his income as consumption is always positive.

4. State and discuss any two environmental concerns faced by India in the present times.
OR
Study the graph and analyse the reason for more self employed workers are there in rural areas as compared to urban areas.

Answer: There are many environmental issues faced by India in the present times. Some of them are:
Air pollution, growing water scarcity, water pollution, biodiversity loss, etc.
The two environmental concerns are as follow:
(a) Air pollution: Air pollution is  one of the worst pollution affecting India. Average life expectation is likely to go down for more than one year due to air pollution. India has most polluted cities in he whole world. India ranks 141 out of 180 countries in terms of air pollution.
(b) Ground water depletion: It is one of the biggest threat because as ground water is declining it is affecting food security and livelihood in the country. It is also responsible for most of the country’s agriculture production and food crisis.
OR
More self-employment are found in rural areas because in rural areas people work on their own farms to earn their livelihood. There are lots of opportunities available in rural areas for self-employment such as poultry farms, sericulture and other farmed base product. In urban areas people are skilled and they work in factories and offices. This is the reason that 56% of the workers are engaged in selfemployment in rural areas as compared to 43% in urban areas.

5. Why are less woman found in regular salaried employment? Give reasons.
Answer: 5. Less woman are found in regular salaried employment due to the following reasons:
(a) Lack of education facilities: Female education is not given due importance in India and hence,majority of the woman in India do not have the educational qualification and professional skills required for egular salaried employment.
(b) Discouragement from family in India: Many families still do not want the female members to step out from the house for work especially it is for long hours, as in regular salaries employment.
(c) Family responsibilities: Household work and responsibility of children and other family members do not allow the women to devote time and energy in regular employment.
(d) Wage discrimination: Gender based wage discrimination is prevalent in India which demotivates the women in regular salaried employment and they prefer being at home or opt for self-mployment opportunities.
(e) Security issues: Rise in crime against women has also been a reason of women withdrawing from regular employment due to security concerns. Late working hours in private sector firms and MNCs are not found suitable by most of the women.

6. Which among the following are final goods and intermediate goods? Given 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
Calculate gross value added at factor cost from the following: (` in crores)
(a) Gross value of output at MP =Rs.10,500
(b) Depreciation = Rs.1,000
(c) Indirect taxes = Rs.750
(d) Economic subsidies = Rs.200
(e) Intermediate consumption = Rs.4,000
(f) Compensation of employees = Rs. 2,000
Answer:  (a) It is an intermediate good because it is used by the tea seller during production process i.e., making tea and not for final consumption.
(b) It is a final good as, it is purchased by school for final consumption.
(c) It is a final good as, it is purchased by a student for final consumption.
OR
Gross value added at Factor cost will be calculated as under:
Gross value of output at MP + Economic Subsidies – Intermediate Consumption – Indirect taxes
= 10,500 + 200 – 4,000 – 750
= 10,700 – 4750
= `5950 crores

7. Trend in Employment pattern

Study the following information and analyse the status of casualisation of the workforce.
Read the following text carefully and answer the question number 8 and 9 given below.
India has imposed anti – dumping duty on five Chinese products for five years in order to protect local manufacturers from cheap imports from the neighbouring country. The duty has been imposed on some aluminium products and chemicals.
Anti – dumping duty is the imposition of levy by importing country in order to counter the dumping of products and save the domestic market. These measures are taken to ensure fair trade and provide equal opportunities to the domestic country.
The duty has been imposed on the recommendations of Directorate General of Trade Remedies (DGTR),the investigation arm of the Ministry of Commerce.
Both India and China are the members of WTO and India has initiated maximum anti-dumping cases against imports from China.
Answer: The movement of the labour from regular salaried worker to casual wage worker is known as casualisation of workforce.
This distribution of workforce indicates that the people have moved from self-employment to regular salaried employment and casual wage work implying that casualisation is picking up. Yet selfemployment continues to be the major employment provider.

8. Explain the causes that led India to impose anti-dumping duty on Chinese products.
Answer: Anti–dumping duty has been imposed By India on Chinese products because of the following reasons:
(a) China provides heavy subsidies on its exports. Therefore, Chinese products in India become quite cheaper than domestic products. This strategy by neighbouring country badly affects the domestic manufacturers of India.
(b) Domestic manufacturers are not in a position of competing with Chinese products because of high prices of factors of production.

9. Discuss how these measures will impact Indian economy.
Answer: 9. Anti-dumping measures will impact Indian economy in the following ways:
(a) India’s import bill will certainly go down because India is one of the biggest importer of Chinese products.
(b) India’s trade balance will improve due to less imports.
(c) Domestic manufacturers will benefit as Chinese products will become quite expensive as compared to domestic products. Increased production in India will lead to increase in employment opportunities.

10. Explain the effects of excess demand on output, employment and prices.
Answer: 10. Excess demand has following effects:
(a) Effect on Output: Due to excess demand in an economy, the resources are over utilised. Production is maximum and cannot be increased further.
(b) Effect on Employment: The economy has already achieved full employment level and hence, there is no involuntary unemployment in the economy. The employment level will not change during the situation of excess demand.
(c) Effects on Prices: Since excess demand generates pressure on existing flow of goods and services in the economy, the prices will rise.

11. Taxation plays an important role in reducing excess demand. State the reason to justify the given statement.
Answer: Excess demand refers to the situation when aggregate demand (AD) is in excess of aggregate supply (AS) corresponding to full employment in the economy. In a situation of excess demand, government raises the rates of all taxes. This reduces the purchasing power of the people and reduces both consumption and investment expenditures. A fall in consumption and investment expenditures reduces the level of aggregate demand and helps to check the problem of excess demand.

12. (a) Calculate National Income from the following data: (Rs. in crores)

(b) Distinguish between Real and Nominal Gross Domestic Product.
OR
(a) Calculate:
(i) Net National Product at Factor Cost and
(ii) Gross National Disposable Income from the following data

(b) How can externalities be a limitation of using Gross Domestic Product as an index of welfare?
Answer: 12. (a) NDPFC = (x) + (ii) + (iii) + (v) + (vi) + (vii) + (viii)
= 450 + 75* + 160 + 130 + 45 + 15 + 10 = 885 Crores.
NNPFC = NDPFC + (ix)
= 885 + (–10) = `875 Crores
Notes of solution:
Since wages and salaries and employer contribution to social security are given separately, these must be added to obtain compensation to employees.
Dividend, undistributed profit, and corporate taxes are to be added to get Total profit/Retained Earnings.
Net indirect taxes is not required in this question. Similarly, consumption of fixed capital is also not required in this question.
(b) (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.
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.
OR
(a) (i) Net National Product at Factor Cost (NNPFC)
= Personal Disposable Income + Personal Tax + Corporation Tax + Retained Earnings of Private
Corporate Sector – Current Transfers Payments by Government – National Debt Interest
+ Net Current Transfers to Rest of the World + Saving of Non-departmental enterprises +
Income from Property and Entrepreneurship Accruing to the Government Administrative Departments
= 1100 + 100 + 40 + 10 – 50 – 30 + 10 + 60 + 80
= `1320 crore
(ii) Gross National Disposable Income = NNPFC + Net Indirect Tax – Net Current Transfers to Rest of the World + Consumption of Fixed Capital
= 1320 + 90 – 10 + 70
= `1470 crore
(b) Increase in Gross Domestic Product is due to increased economic activities like industrialisation and urbanisation. With the increase in industrialisation, certain problems for society also increase like pollution of air, water and soil and deforestation. Urbanisation also results in housing problems,increase in road accidents, etc. On the whole, welfare decreases and this decrease in welfare is ignored while calculation of GDP. So, we can say that externalities can be a limitation of using GDP as an index of welfare.

13. (a) Compared to women, more men are found working in India. It has been observed that for every 100 urban female, only about 15 works. In rural areas, for every 100 rural women only about 25 works.
Why are women not working? What values are affected by it?
(b) Infrastructure provides supporting services in the main areas of industrial and agricultural production. In the context of above statement, explain how infrastructural facilities boost up the production.
Answer: (a) The participation rate of women in the employment market, for both, rural and urban areas, is quite low. Some of the reasons for such a low rate are given below:
(i) India is typically a male-dominated country. Because of this, females are accorded secondary status and parents do not take steps to educate them.
(ii) Even if they are educated, the social beliefs and set-up discourage them to work. The value of ‘gender-equity’ is affected.
(b) The prosperity of a country depends directly upon the development of agricultural and industrial production. Agricultural production requires power, credit, transport facilities, etc.; the deficiency of which leads to fall in productivity. Industrial production requires machinery and equipment, energy, banking and insurance facilities, marketing facilities, transport services which include railways, roads and shipping and communication facilities, etc. All these facilities help in raising agricultural and industrial productivity.