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Blue Print of Practice Papers . (as per design of Question paper issued by CBSE) Very Short Short S.NO Conten Unit short Answer Answer t Unit Title Answer I 3 II 4 MCQ marks marks 1mark Long Answer 6 marks Total Introductory Microeconomics 1. Unit-1 2. Unit-2 3. Unit-3 4. Unit-4 Introducti on - 2 Consumer s equilibriu m and demand Producer Behaviour and Supply Forms of Market and Price Determina tion Under Perfect Competitio n 2 - - - 2 1 1 - 2 - 1 6 1 16 2 16 1 12 Introductory Macroeconomics 5. Unit-5 6. Unit-6 7. Unit-7 9. 10. Unit-8 Unit-9 National Income and Related Aggregate s Money and Banking Determina tion of Income and Employme nt Governme nt Budget and the Economy Balance of Payments Sub-total 1 - 2 2 - - 1 8 - 2 - 1 12 2 - - 1 8 1 1 - 7 10 6 X 6 1 X 8 15 X 100(30 X1=10 Practice Paper 3=18 4=24 6=48 ) 3 MICROECONMICS SECTION A : INTRODUCTORY 1. When price of a good falls, the impact on demand curve of its complimentary good is indicated by: (i) A shift in demand curve to the right (ii) A shift in demand curve to the left (iii) An upward movement along the curve (iv) A downward movement along the curve 2. A consumer is in equilibrium when MUx=4, MUy = 10 and Py = 5. At the equilibrium point, Px will be: (i) 2.5 (ii) 4 (iii) 2 (iv) 12.5 3. Depreciation is explicit cost. True/false. Give reason. 4. Name the market in which selling cost is not required. 5. When more of a commodity can be sold only at the lower price, the demand curve will be: (i) Downward sloping from left to right (ii) Upward sloping from left to right (iii) A straight line (iv) None of these 6. A shift from actual level of output to the potential level of output shift PPC to the right. Comment. Or How the dream of Digital India will impact the PPC of Indian Economy. Comment 7. Define marginal opportunity cost. What are the reasons of increasing marginal opportunity cost. 8. Explain the relationship between average cost curve and marginal cost curve. 9. Give four causes of increase in demand. 10.Explain the concept of price ceiling with the help of a diagram. Or Explain the concept of floor price with the help of a diagram. 11.The price elasticity of demand of good X and Y are in the ratio of 1 : 3. At 10% rise in in the price of good X results in a fall in its demand from 500 to 400 units. Calculate the percentage change in quantity demanded of good Y when its price falls from Rs.10 to Rs.8 per unit. 12. Increase in input prices has increased the cost of production of consumer goods . Use a diagram and economic theory to analyse the impact of the above statement on the supply of consumer goods in the domestic economy. 13.Giving reasons, state whether the following statements are true or false. (i) Increase in total product always indicates that there are increasing returns to a factor. (ii) Marginal revenue is always the price at which the last unit of a commodity is sold. (iii) When there are diminishing returns to a factor, marginal and total product both always fall. 14.Explain the conditions of consumer s equilibrium with the help of the indifference curve analysis. 15. Onions make people cry . How the govt. can control the market price of onion by market forces. Explain with the help of a diagram. Or Market of a commodity is in equilibrium. Demand for the commodity decrease . Explain the chain of effects of this change till the market again reaches equilibrium. Use diagram. MACROECONOMICS SECTION B: INTRODUCTORY 16.Define money supply. 17.Name two instruments of monetary policy of RBI 18.Give two examples of macroeconomic studies. 19.Which one of the following is not an objective of government budget? (a) Reallocation of resources (b) Economic stability (c) Increasing regional disparities (d) economic Growth 20.Which of the following is not correct? (i) Primary deficit = Fiscal deficit Interest payment (ii) Revenue deficit = Revenue expenditure Revenue receipts (iii) Fiscal deficit = Primary deficit + Interest payment (iv) None of these 21.Explain the reason for inverse relationship between price of a foreign currency and its demand. 22.Explain the role of CRR in correcting the deficiency of demand in an economy. 23. Calculate MPC from the following data : National Income = 1500 ; Autonomous consumption exp. = 300 ; Investment Expenditure = 300 24.Distinguish between intermediate goods and final goods. Or Explain the circular flow of income. 25.Distinguish between depreciation of currency and appreciation of currency. Give an example. 26.Giving reason, explain how the following are treated in the estimation of national income: (i) Rent paid by the embassy of Japan in India to a resident Indian. (ii) Entertainment tax received by the government. 27.The Namami Ganga Project, govt. allocated 2034 crore for conservation of river Ganga. Is this wasteful expenditure on the part of the govt. Justify this budgetary policy to promote GDP growth in the economy? 28.Giving reasons, state whether the following statements are true or false: (i) When investment multiplier is 1, the value of MPS is zero. (ii) Sum of APC and MPC is always equal to 1. (iii) If the ratio of MPC and MPS is 1:1. The value of investment multiplier is 5 29.Explain following functions of a central bank:(a) Currency authority(b) Lender of last resort. 30. Calculate (a) Net Domestic Product at Factor Cost and (b) Private Income from the following. 1. Domestic product accruing to government 300 2. Wages and salaries 1000 3. Net current transfer to abroad (20) 4. Rent 100 5. Interest paid by the production units 130 6. National debt interest 30 7. Corporation tax 50 8. Current transfer by government 40 9. Contribution to social security scheme by employers 200 10.Dividends 100 11.Undistributed profits 20 12.Net factor income to abroad 10 Or Find (a) Net National Product at Market Price, and (b) Gross National Disposable Income: Items (Rs.in crore) (i) Wages and salaries 1500 (ii) Rent 300 (iii) Net current transfers to abroad 120 (iv) Net indirect tax 240 (v) Royalty 200 (vi) Profits 700 (vii) Net factor income to abroad (-)40 (viii) Consumption of fixed capital 340 (ix) Social security contribution by employers 220 (x) Social security contribution by employers 180 (xi) Interest 900 Practice 4 Time allowed: Maximum Marks: 100 General Instructions: Same as Practice Paper -1. MICROECONMICS 3 Paper Hours SECTION A : INTODUCTORY 1. Define market demand of a commodity. 2. Expansion and contraction in demand are caused by; (a) Change in price of the given good (b) Change in income (c) Change in price of related good (d) Change in population 3. When price of the commodity and total expenditure move in the opposite direction, elasticity of demand will be: (i) Equal to zero (ii) Equal to one (iii) Greater than one (iv) Less than one 4. In which market form, marginal revenue is equal to price? (a) Monopoly (b) Oligopoly (c) Perfect Competition (d) Monopolistic Competition 5. Cartel emerges when there is: (i) Collusive oligopoly (ii) Non-collusive oligopoly (iii) Perfect oligopoly (iv) Imperfect oligopoly 6. BIN TRASH, WIN WI-FI . In a unique initiative, titled wifi trash bin , free wifi to people in exchange for cleaner surrounding. How the above headlines will impact PPC. 7. Explain the problem of allocation of resources. 8. Explain the geometric method of measuring price elasticity of demand. Use a suitable diagram. Or When the price of a commodity is Rs. 20 per unit, its quantity demanded is 800 units. When its price rises by Rs. 5 per unit, its quantity demanded falls by 20 per cent. Calculate its price elasticity of demand. Is its demand elastic? Give reasons for your answer. 9. Complete the following table: Output (units) AVC (Rs.) TC (Rs.) MC (Rs.) 1 60 20 2 18 3 18 4 20 120 5 22 10.Explain the price discrimination feature monopoly. Or Explain the rigid price policy feature of oligopoly. 11.State whether the following statements are True or False. Justify your answer. (i) Budget set and budget line are two sides of the same coin. (ii) Slope of the demand curve is constant at all points on the demand curve. 12.What does the diminishing marginal rate of substitution indicate? Relate it to the law of diminishing marginal utility. 13.Explain the likely behaviour of total product and marginal product when only one input is increased while all other inputs are kept unchanged. Use diagram 14.Explain briefly the following determinants of supply: (i) Increase in the price of inputs (ii) Decrease in tax on the product (iii) Technological changes 15.The following headline appeared in the economics Times on 9 Nov 2014. India Nepal to sign deal for 900MW power project. Use a diagram and economic theory to analyse the statement. OR On 23 November 2014, the following news item was printed in the economics Times. Government increase the subsidies on LPG Use a diagram and economic theory to analyse the impact of increase in subsidy on the demand of LPG. MACROECONOMICS SECTION B: INTRODUCTORY 16.Choose the wrong one: (a) APC can be more than 1 (b) APC can be equal to 1 (c) APC rises with increase in income(d) APC can never be 0 17. When economy save the whole of its additional income, then value of investment multiplier will be: (a) 1 (b) Indeterminate (c) 0 (d) Infinity 18.What are capital expenditures? 19.Payment of pension is an example of: (i) Plan Expenditure (ii) Revenue Expenditure (iii) Capital Expenditure (iv) Non Plan Expenditure 20.Export of merchandise including capital goods < Import of merchandise including capital goods, indicates that: (i) Balance of trade is in surplus (ii) Balance of trade is in deficit (iii) Capital account BOP is in surplus (iv) Capital account BOP is in deficit 21.Distinguish between real and nominal GDP. Which of the two is a better index of welfare of the people and why? 22.How is the appreciation of the domestic currency good for the people of a country? Or Depreciation of domestic currency leads to a rise in AD. Explain how. 23. Explain all the changes that will takes place in an economy when aggregate demand is not equal to aggregate supply. 24.Distinguish between current account and capital account of balance of payment account. 25.(a) What is meant by Margin Requirement? How can it be used to control the money supply? Explain it with the help of numerical example. Or (b) How does a central bank influence credit creation by commercial banks through open market operation? 26.Explain any two functions of money. 27.In the government of Indian s budget for the year 2013-14, the finance Minister proposed to raise the excise duty on alcohol. He also proposed to increase income tax on individual earning more than Rs. 1 crore per annum. Identify and explain the types of taxes proposed by the Finance Minister. Was the objective only to earn revenue? What possible welfare objectives could the government be considering? 28.Giving reason, explain how the following are treated in estimating national income: (i) Income tax (ii) Old-age pension (iii) Social security contribution paid by employer. 29. Explain the working of investment multiplier with the help of a numerical example. 30. From the following data, calculate (a) GDPFC and (b) factor income to abroad (i) Compensation of employees = 800 (ii) Profits = 200 (iii) Dividends = 50 (iv) GNPMP = 1400 (v) Rent = 150 (vi) Interest = 100 (vii) Gross domestic capital formation = 300 (viii)b Net fixed capital formation = 200 (ix) Change in stock = 50 (x) Factor income from abroad = 60 (xi) Net indirect taxes = 120 OR Calculate NNPFC and Gross National Disposable Income from the following data: (i) Saving of non-departmental enterprises = 50 (ii) Income from property and entrepreneurship accruing to Govt. administrative departments = 70 (iii) Personal tax = 90 (iv) National debt interest = 20 (v) Retained earning of private corporate sector = 10 (vi) Current transfers from rest of the world (-) 10 (vii) Consumption of fixed capital = 60 (viii) Current transfer payment by Govt. = 40 (ix) Corporate tax = 30 (x) Net indirect taxes = 80 (xi) Personal disposable income = 1000 Practice 5 Time Maximum Marks : 100 MICROECONOMICS Allowed : 3 Paper Hours SECTION A : INTRODUCTORY 1. When income of the consumer increases, budget line: (i) Shifts to the right (ii) Shifts to the left (iii) Rotates to the right towards the Y-axis (iv) Rotates to the left towards the Y-axis 2. When own price of a commodity falls, the impact on demand curve is indicated by: (i) Rightward shift in demand curve (ii) Leftward shift in demand curve (iii) An upward movement along the curve (iv) A downward movement along the curve 3. Interdependence Between Firms is a feature of which type of market form: (a) Oligopoly (b) Monopolistic competition (c) Monopoly (d) Perfect competition 4. What is the condition of normal profit. 5. Which of the following supply curve is more elastic (i) Which pass through the origin. (ii) Cut positive X -axis (iii) Cut positive Y -axis (iv) All of the above 6. What are the three central problem of an economy? Explain the one which deals with problem of choice. 7. Discuss briefly the impact of Start-up, Stand-up India , announced by the Prime Minister on Independence day recently on the PPF of the country? Use diagram. 8. Find out Explicit Cost and Implicit Cost from the following: (Rs. In thousand) (i) Investment in fixed assets = 2000 (ii) Borrowing at 12 % interest p.a. = 1500 (iii) Wages paid during the year = 120 (iv) Annual rental value of the owner s factory building = 100 (v) annual depreciation = 100 (vi) Estimated annual value of the management = services of the owner = 240 Or Explain the relation between average revenue and marginal revenue. 9. Income effect can be positive as well as negative. Comment with an example. 10. State whether the following statements are True or False. Justify your answer. (i) When elasticity of demand is infinity, slope of demand curve will also be infinity. (ii) With increase in tax on cigarettes, their consumption will fall. 11. Explain why a firm under perfect competition cannot earn abnormal profit in the long run. Can it earn abnormal profit in the short run? Or Differentiate between collusive and non collusive oligopoly. Which of the two is beneficial for the consumer? Explain. 12. (i) How return to factor is different from return to scale (ii) Distinguish between extension of supply and increase in supply. 13. The producer does not maximise profits when the marginal product is rising or marginal cost is falling. Explain with reason. Use a suitable diagram. 14. Explain equilibrium of the consumer using indifference curve technique when two substitute goods are consumed. Or How does increase in the price of a commodity impact consumer s equilibrium when he spends his given income across two good? Use utility analysis. 15. Market for an essential items of consumption is in equilibrium, but the equilibrium price is too high for the common man. What can the Govt. do to bring down if market price but only through the normal market force? Explain the chain of effect of the government s action? OR Suppose there is a sudden increase in birth rate. The increase in population has raised the demand for shirts. At the same time, due to fall in price of cotton, the supply of shirts have also increased. How will it affect the equilibrium qty of shirts? MACROECONOMICS SECTION B : INTRODUCTORY 16. Which of the following is not an example of flow variable.? (a) Number of birth in a year (b) National wealth. (c) National income (d) Wheat produced in a year. 17. Identify the function of money which has led to capital formation and economic development of the economy. (a) Medium of exchange (b) Measure of value (c) Store of value (d) Standard of deferred payment 18.What is Statutory Liquidity Ratio? 19.Which of the following is an example of direct tax? (i) Value added tax (ii) Corporate tax (iii) Sales tax (iv) Excise duty 20.Which of the foll0wing is a source of revenue receipt? (i) Corporation tax (ii) Donation (iii) Borrowings (iv) Both (a) and (b) 21.Balance of payments always balances. Explain how. 22.Distinguish between inflationary gap and deflationary gap. 23.An economy is in equilibrium. The economy consumption s function is C = 160 + 0.6Y where C is consumption expenditure and Y is national income. National income is Rs. 1,400. Find out the equilibrium level of consumption and investment expenditure. Or In an economy, the consumption function is C = 230 + 0.7 Y where C is consumption expenditure and Y is income. Calculate the equilibrium level of income and consumption expenditure when investment expenditure is 400. 24.During a year nominal national income increased by 14 percent while the real national income increased by only 6 percent. Population increased by 2 percent. What has caused the difference between real and nominal income. What is real per capita income. 25.Giving reason, explain how the following are treated in estimating national income: (i) Old age pensions. (ii) Payment of electricity bill by a factory. 26.Explain four sources of supply of foreign exchange reserves. 27.(i) The Government of Delhi has recently increased VAT (value added tax) on petrol and diesel. How would it impact fiscal deficit of the government and general price level in the state of Delhi? (ii) Find (a) fiscal deficit and (b) primary deficit from the following: Revenue Expenditure = 70,000 Borrowings = 15,000 Revenue Receipts = 50,000 Interest payment = 25% of revenue deficit 28.Explain with the help of diagram how equilibrium level of income in an economy is determined by saving and investment curves. Will there always be full employment level of income? 29.Explain the credit control function of the central bank. 30.From the following data, calculate(a) National Income, and (b) Personal Disposable Income: Items (Rs. In Crore) (i) Net retained earnings of private enterprises 200 (ii) Direct taxes paid by households 150 (iii) Compensation of employees 1050 (iv) Profit 550 (v) Corporation tax 250 (vi) Mixed income of self-employed 850 (vii) Private income 2050 (viii) Rent 250 (ix) Interest 300 (x) Net factor income from abroad (-)50 (xi) (xii) (xiii) Consumption 150 Net 210 Net (-)90 of fixed indirect capital taxes exports Or Calculate (a) Gross National Product at Market Price and (b) Personal Disposable Income from the following data: Items (Rs. In Crore) (i) Subsidy 60 (ii) Private final consumption expenditure 420 (iii) Consumption of fixed capital 90 (iv) Personal tax 150 (v) Savings of private corporations 80 (vi) Dividend 60 (vii) Indirect tax 140 (viii) Corporation tax 130 (ix) Net national disposable income 1,140 (x) Private income 740 (xi) Net current transfers from abroad 60 (xii) National debt interest 70 (xiii) Miscellaneous receipts of the government administrative departments 70 (xiv) Current transfers from government 90 (xv) Net factor income from abroad (-)80
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