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HIMALAYAN INTERNATIONAL RESIDENTIAL SCHOOL PRE BOARD EXAMINATION 2014 2015 ECONOMICS Time: 3 Hours Name: ............................ CLASS 12 Max. Marks: 80 House No. ........... Candidates are allowed additional 15 mins for only reading the paper. They must NOT start writing during this time. Answer all questions from part I which is compulsory. Answer ANY FIVE questions from Part II. The intended marks for questions are given in brackets [ ]. Part I (Compulsory) Answer all questions Question 1. [10 x 2=20] Answer briefly each of the following questions (i) to (x) (i) (ii) (iii) (iv) State the law of demand. Mention any two assumptions of the law. With the help of a diagram, show how the equilibrium price and quantity changes when supply increases and demand remains unchanged. Differentiate between explicit cost and implicit cost. Determine MPC and APC from the following information: Consumption Expenditure (C) Income (Y) 100 200 (v) (vi) (vii) (viii) (ix) (x) 80 130 Explain the meaning of full employment in macro economics. Explain the meaning of price discrimination in monopoly market. Define budget. When can there be a deficit in the budget? How does Central Bank use moral suasion as a tool to control credit? Define fiscal policy. Mention the tools of fiscal policy. Indicate two differences between short-run and long-run production functions. Part II Answer any five questions Question 2 (a) Discuss any two determinants of demand other than the price of the commodity. [3] Page 1 (b) How can you determine the price elasticity of demand at any point of a demand curve using the geometrical method? (c) [3] Explain with the help of a diagram the relationship between total utility and marginal utility. [6] Question 3 (a) Discuss any three characteristics of a monopoly . (b) Explain the meaning of break-even point and shut down point in a firm. (c) Explain the long run equilibrium of a firm under perfect competition with the help of a diagram. [3] [3] [6] Question 4 (a) Discuss the shape of the Average Fixed Cost Curve. [3] (b) Indicate the three stages of production based on the behavior of average product and marginal product of a variable factor. (c) [3] Explain the shape of TFC, TVC and TC curves with the help of a diagram. What will be the change in the following costs with increase in the level of output? [6] Question 5 (a) Differentiate between devaluation and depreciation of currency. (b) A cost function is given below: Output Total Cost 0 100 1 180 2 240 3 280 [3] 4 340 Find: i) TFC ii) TVC iii) MC (c) Discuss any four measures to correct the disequilibrium in the balance of payment. [3] [6] Question 6 (a) Briefly explain the types of deposits of commercial banks. (b) [3] Discuss in brief the Open Market Operations and Cash Reserve Requirements used by the Central Bank to control credit. (c) [3] Explain the process of credit creation by the commercial banks. [6] Page 2 Question 7 Distinguish between the terms Revenue deficit , Fiscal deficit and Primary deficit (a) in the budget. [3] (b) Discuss any three issues that highlight the need and importance of government budget. [3] (c) Explain any four methods of redemption of public debt. [6] Question 8 (a) Explain the need for deficit financing in a country like India. [3] (b) In a situation of income inequality, give two ways in which fiscal policy can be used in bringing about equity. [3] Explain diagrammatically the concept of excess demand . What policy measures (c) would you suggest to overcome the situations of excess demand ? [6] Question 9 (a) Distinguish between real and nominal Gross Domestic Product. [3] (b) With the help of a well labelled diagram, show the circular flow of income in a two sector model with leakage and injection. (c) [3] Calculate GNPMP from the given information following: i. Income Method and ii. Expenditure Method Rs. in crores (i) Private final consumption expenditure 800 (ii) Net exports 20 (iii) Rent 40 (iv) Interest 60 (v) Government final consumption expenditure 200 (vi) Profit 120 (vii) Net domestic capital formation 100 (viii) Compensation of employees 800 (ix) Net indirect taxes 100 (x) Consumption of fixed capital (xi) Net factor income from abroad 20 (--) 30 [6] __________________ Page 3
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