EconomicsCBSE Class 12 · Board exam 2026 (session 2025-26)

CBSE Class 12 Economics: 2026 board paper, set 58/5/1

The question paper set in the CBSE Class 12 board exam of 2026, as printed: 34 questions for 80 marks, in sections, with each OR choice shown as an alternative. Try each question first, then open our solution.

Every question here has our step-by-step solution, split into the steps that earn marks. Each one was checked by an independent re-solve from the question paper.

Source: official question paper from cbse.gov.in: https://www.cbse.gov.in/cbsenew/question-paper/2026/XII/Economics.zip (a zip; this paper is the file 58-5-1_Economics.pdf). Questions are transcribed from that PDF; figures are described in words, so check the official paper for them. Questions printed only for visually impaired candidates are left out (3).

Practise a paper like this, timedMy board paper sets a full paper in this exact format from real board questions, with a timer.Get your written answers markedThe Answer Coach marks a photo of your handwritten answer step by step, like the examiner.

How the paper is set

Section	Questions	What it has
A	1-17	Macro Economics: MCQ 1-10, others mixed marks
B	18-34	Indian Economic Development: MCQ 18-27, others mixed marks

Instructions in brief: All questions compulsory; 20 MCQs of 1 mark, 4 SA-I of 3 marks, 6 SA-II of 4 marks, 4 long of 6 marks; internal choice in a few questions; separate questions for Visually Impaired candidates.

Section A

Macro Economics: MCQ 1-10, others mixed marks

Q1 · 1 mark · MCQCompetency-basedNational Income Accounting
"The Ministry of Statistics and Programme Implementation (MoSPI) is underway to revise the base year of Gross Domestic Product (GDP). The base year is revised periodically to better capture the structural changes happening in the economy. The proposed new base year for the GDP is 2022 – 23."
The step taken by the Government of India is for revision of ___________ Gross Domestic Product (GDP), as it is measured at ___________ prices. (Choose the correct option to fill in the blanks)
1. (A)Real, constant
2. (B)Nominal, current
3. (C)Real, current
4. (D)Nominal, constant
Try it first, then show our solutionSolution
1. A base year matters only for a GDP series that values output at the prices of a fixed year. Nominal GDP uses each year's own (current) prices and needs no base year.
2. Revising the base year therefore revises real GDP, which is measured at constant (base-year) prices. Option (A).
  1 mark
Answer: (A) Real, constant
Where the marks are
- Base year is used for real GDP at constant prices (1 mark)
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Q2 · 1 mark · MCQCompetency-basedDetermination of Income and Employment
With reference to the given diagram, OL indicates ___________ . (Choose the correct option to fill in the blank)
(i) Autonomous Consumption (ii) Autonomous Investment (iii) Induced Consumption (iv) Induced Investment
1. (A)Only (i)
2. (B)Only (ii)
3. (C)Sum of (i) and (ii)
4. (D)Sum of (i) and (iii)
Figure in the paper: Graph with X-axis 'Level of Income' and Y-axis 'Consumption, Investments'. A line AD starts at point L on the Y-axis and rises; consumption line C = C̄ + MPC (Y) starts at M on the Y-axis (below L and J) and rises; a horizontal investment line I at height J on the Y-axis. Order on the Y-axis from top: L, J, M, O. The consumption line crosses the investment line. See it in the official paper.
Try it first, then show our solutionSolution
1. In the diagram, M (the intercept of C = C̄ + MPC·Y) is autonomous consumption C̄, and J (the height of the flat I line) is autonomous investment Ī. The AD curve is C + I, drawn parallel to the C line and above it by the amount of I.
2. So the AD intercept OL = OM + OJ = autonomous consumption + autonomous investment (AD at zero income). Option (C).
  1 mark
Answer: (C) Sum of (i) and (ii)
Where the marks are
- OL = C̄ + Ī (1 mark)
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Q3 · 1 mark · MCQMoney and Banking
Money supply is a ___________ variable, as it refers to the total volume of money held by the ___________ at a particular point of time. (Choose the correct option to fill in the blanks)
1. (A)stock, banks
2. (B)flow, banks
3. (C)stock, public
4. (D)flow, public
Try it first, then show our solutionSolution
1. Money supply is measured at a point of time (e.g. as on 31st March), so it is a stock variable, not a flow.
2. It is the total money held by the public (households and firms), excluding money held by the government and the banking system itself. Option (C).
  1 mark
Answer: (C) stock, public
Where the marks are
- Money supply is a stock held by the public (1 mark)
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Q4 · 1 mark · MCQOpen Economy Macroeconomics
Under the flexible exchange rate system, the exchange rate is determined by the ___________ .
(i) Government
(ii) Demand and supply
(iii) Intervention of the Central Bank
(Choose the correct option to fill in the blank)
1. (A)Only (i)
2. (B)Only (ii)
3. (C)Only (iii)
4. (D)(ii) and (iii)
Try it first, then show our solutionSolution
1. Under a flexible (floating) exchange rate system, the rate is set in the foreign exchange market by the free play of demand for and supply of foreign currency.
2. Government fixing or central bank intervention belongs to fixed or managed floating systems, so only (ii) applies. Option (B).
  1 mark
Answer: (B) Only (ii)
Where the marks are
- Flexible rate set by demand and supply (1 mark)
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Q5 · 1 mark · MCQNational Income Accounting
Following are the steps to measure National Income ( $NN P_{FC}$ ) by Value Added method :
(i) Calculate Domestic Income ( $ND P_{FC}$ ) by subtracting Depreciation and Net Indirect Taxes from $GD P_{MP}$ .
(ii) Estimate $GD P_{MP}$ by adding GVA of each firm.
(iii) Estimate and add Net Factor Income from Abroad to $ND P_{FC}$ to arrive at $NN P_{FC}$ .
(iv) Identify and classify the production units into primary, secondary and tertiary sector.
The correct order of arrangement of steps would be : (Choose the correct option)
1. (A)(ii), (iii), (i), (iv)
2. (B)(iv), (ii), (i), (iii)
3. (C)(iv), (ii), (iii), (i)
4. (D)(iii), (iv), (ii), (i)
Try it first, then show our solutionSolution
1. Value-added method order: first identify and classify producing units into primary, secondary and tertiary sectors (iv); then add the gross value added of all firms to get GDP at market price (ii).
2. Next subtract depreciation and net indirect taxes to get NDP at factor cost (i); finally add net factor income from abroad to get NNP at factor cost (iii). Order: (iv), (ii), (i), (iii). Option (B).
  1 mark
Answer: (B) (iv), (ii), (i), (iii)
Where the marks are
- Correct sequence of steps (1 mark)
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Q6 · 1 mark · MCQDetermination of Income and Employment
An economy may operate at a level below full employment due to a deficiency in Aggregate Demand (AD) leading to a/an ___________ employment equilibrium.
(i) Full
(ii) Over
(iii) Under
(Choose the correct option to fill in the blank)
1. (A)Only (i)
2. (B)Only (ii)
3. (C)Only (iii)
4. (D)(ii) and (iii)
Try it first, then show our solutionSolution
1. Keynes showed that equilibrium (AD = AS) can occur at a level of output below full employment when aggregate demand is deficient.
2. Such an equilibrium, with involuntary unemployment, is called an under-employment equilibrium. Option (C).
  1 mark
Answer: (C) Only (iii)
Where the marks are
- Deficient AD leads to under-employment equilibrium (1 mark)
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Q7 · 1 mark · MCQCompetency-basedNational Income Accounting
Read the following statements carefully :
Statement I : Positive externalities refer to the benefits a firm/an individual provides to another for which they are paid.
Statement II : In case of positive externalities, Gross Domestic Product (GDP) of an economy might lead to an overestimation of the actual welfare.
In the light of the given statements, choose the correct option from the following :
1. (A)Statement I is true and Statement II is false.
2. (B)Statement I is false and Statement II is true.
3. (C)Both Statements I and II are true.
4. (D)Both Statements I and II are false.
Try it first, then show our solutionSolution
1. Statement I is false: positive externalities are benefits one person or firm gives to others without being paid for them (e.g. a beekeeper's bees pollinating a nearby orchard).
2. Statement II is false: such benefits are not counted in GDP, so with positive externalities GDP underestimates welfare, not overestimates it (negative externalities cause overestimation). Option (D).
  1 mark
Answer: (D) Both Statements I and II are false.
Where the marks are
- Externalities are unpaid; positive ones mean GDP underestimates welfare (1 mark)
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Q8 · 1 mark · MCQMoney and Banking
Suppose, for a hypothetical economy, Reserve Ratio (RR) decreases from 25% to 20%, the total deposits would ___________ to ₹ ___________, if primary deposits are ₹ 1,000. (Choose the correct option to fill in the blanks)
1. (A)increase, 5,000
2. (B)decrease, 5,000
3. (C)increase, 4,000
4. (D)decrease, 4,000
Try it first, then show our solutionSolution
1. Total deposits = Primary deposits × 1/RR. At RR = 25%: 1,000 × 1/0.25 = ₹ 4,000.
2. At RR = 20%: 1,000 × 1/0.20 = ₹ 5,000. A lower reserve ratio raises the money multiplier, so total deposits increase to ₹ 5,000. Option (A).
  1 mark
Answer: (A) increase, 5,000
Where the marks are
- Deposits = 1,000 / 0.2 = 5,000 (1 mark)
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Q9 · 1 mark · Assertion-reasonCompetency-basedOpen Economy Macroeconomics
Read the following statements : Assertion (A) and Reason (R). Choose the correct option from those given below :
Assertion (A) : Transfers from Abroad (remittances) are to be recorded on the credit side of capital account of Balance of Payments (BoP).
Reason (R) : All the transactions that lead to inflow of foreign currency from the rest of the world are recorded on the credit side of Balance of Payments (BoP).
1. (A)Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
2. (B)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
3. (C)Assertion (A) is true, but Reason (R) is false.
4. (D)Assertion (A) is false, but Reason (R) is true.
Try it first, then show our solutionSolution
1. Assertion: False. Remittances (transfers from abroad) are unilateral transfers recorded on the credit side of the current account, not the capital account.
  Reason: True. Every transaction that brings foreign currency into the country (exports, transfers received, borrowing from abroad) is recorded on the credit side of the BoP.
2. A is false and R is true. Option (D).
  1 mark
Answer: (D) Assertion (A) is false, but Reason (R) is true.
Where the marks are
- Truth of A and R and the link between them (1 mark)
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Q10 · 1 mark · MCQMoney and Banking
Liabilities for any firm are its debt/what it owes to others. Contrary to that, for a bank ___________ are the main liability. (Choose the correct option to fill in the blank)
1. (A)loans
2. (B)reserves
3. (C)deposits
4. (D)assets
Try it first, then show our solutionSolution
1. A bank owes its depositors the money they have deposited; depositors can demand it back.
2. So deposits are the main liability of a bank (loans and reserves are its assets). Option (C).
  1 mark
Answer: (C) deposits
Where the marks are
- Deposits are the bank's main liability (1 mark)
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Q11 · 3 marks · Short answerNational Income Accounting

Estimate the value of 'Income from Property and Entrepreneurship' on the basis of the given data :

S. No.	Items	Amount (in ₹ crore)
(i)	Wages and salaries	1,300
(ii)	Rent	700
(iii)	Employer's contribution to social security schemes	300
(iv)	Royalty	200
(v)	Corporate tax	100
(vi)	Interest	350
(vii)	Consumption of fixed capital	50
(viii)	Dividends	150
(ix)	Savings of private corporate sector	200

Try it first, then show our solutionSolution

Income from property and entrepreneurship = Rent + Royalty + Interest + Profit, where Profit = Corporate tax + Dividends + Savings of private corporate sector (undistributed profit).
1½ marks
= 700 + 200 + 350 + (100 + 150 + 200)
1 mark
= ₹ 1,700 crore. (Wages and salaries and the employer's contribution are compensation of employees; consumption of fixed capital is not a factor income, so these are left out.)
½ mark

Answer: Income from property and entrepreneurship = ₹ 1,700 crore.

Where the marks are

Correct formula (1½)
Substitution (1)
Answer ₹ 1,700 crore (½)

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Answer one of these 2 alternatives.
Q12(a) · 3 marks · Short answerMoney and Banking
"Repo Rate and Bank Rate are two different measures, but a change in either of them may have the similar implication on the money supply in an economy."
Defend or refute the given statement, giving valid explanation in support of your answer.
Try it first, then show our solutionSolution
1. The statement is defended. Repo rate and bank rate are both rates at which the central bank lends to commercial banks; the difference is that the repo rate is for short-term loans against government securities (with a repurchase agreement), while the bank rate is for longer-term loans without such collateral.
  1½ marks
2. A change in either has a similar effect. A cut in the repo or bank rate lowers banks' cost of funds, so they cut their lending rates; credit becomes cheaper, borrowing rises and money supply increases. A rise in either rate has the opposite effect and reduces money supply.
  1½ marks
Answer: Defended: both are rates at which the central bank lends to banks (short-term vs long-term), so a change in either moves lending rates and money supply in the same direction.
Where the marks are
- Defended with the meaning of the two rates and the effect on money supply (marked as a whole, 3)
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OR
Q12(b) · 3 marks · Short answerMoney and Banking
"The Reserve Bank of India (RBI) is the sole authority for issuing currency notes in India, with an exception of ₹ 1 denomination that is issued by the Ministry of Finance."
Do you agree with the given statement ? Explain the rationale behind the monopoly enjoyed by the Reserve Bank of India (RBI) on this front.
Try it first, then show our solutionSolution
1. Yes, I agree. The RBI is the sole issuer of currency notes in India; only ₹ 1 notes and coins are issued by the Ministry of Finance (Government of India).
  1 mark
2. The monopoly of note issue brings uniformity in the currency in circulation and strengthens public faith in it. It also lets the RBI control the money supply and so maintain the value of the rupee and price stability.
  2 marks
Answer: Agree: the RBI alone issues notes (except ₹ 1 notes and coins); the monopoly gives uniformity, public confidence and control over money supply.
Where the marks are
- Agreement and the ₹ 1 exception (marked as a whole, 3)
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Q13 · 4 marks · Short answerOpen Economy Macroeconomics
Answer the following.
1. (a)
  Define Balance of Payments (BoP) Account.
  1 mark
2. (b)
  Differentiate between autonomous transactions and accommodating transactions in Balance of Payments (BoP).
  3 marks
Try it first, then show our solutionSolution
1. (a) The Balance of Payments account is a systematic record of all economic transactions in goods, services and assets between the residents of a country and the rest of the world during a period of time, usually a year.
  1 mark
2. (b) Autonomous transactions are made independently of the state of the BoP, with an economic motive such as profit (e.g. exports, imports, FDI). They are the "above the line" items and decide whether the BoP is in surplus or deficit.
  1½ marks
3. (b) Accommodating transactions are undertaken by the monetary authorities to cover a surplus or deficit in the autonomous items (e.g. drawing down foreign exchange reserves, borrowing from the IMF). They have no economic motive of their own and are the "below the line" items.
  1½ marks
Answer: (a) The BoP records all transactions of residents with the rest of the world in a year. (b) Autonomous items are made for an economic motive; accommodating items settle the BoP gap.
Where the marks are
- Definition of BoP (1)
- Autonomous transactions (1½)
- Accommodating transactions (1½)
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Answer one of these 2 alternatives.
Q14(a) · 4 marks · Long answerCompetency-basedNational Income Accounting
A company named Tech Info Ltd. manufactures printers. The company purchases machinery from Germany to manufacture printers. These printers are sold in the domestic and foreign markets to households and dealers. The machinery purchased and printers manufactured, both can be classified as final goods.
Do you agree with the given statement ? Give valid arguments in support of your answer.
Try it first, then show our solutionSolution
1. No, I do not agree. Not all the goods are final goods.
2. The machinery bought from Germany is a final good: it is a capital good used for investment, not used up or resold within the year.
  1 mark
3. Printers sold to households (and those exported) are final goods: they reach their final users for consumption.
  1 mark
4. Printers sold to dealers are intermediate goods, because they are bought for resale within the same year.
  1 mark
5. Final goods are goods meant for final consumption or investment; intermediate goods are goods used for further production or for resale during the same year.
  1 mark
Answer: Disagree: machinery and printers sold to households are final goods, but printers sold to dealers for resale are intermediate goods.
Where the marks are
- Machinery as final (1)
- Printers to households as final (1)
- Printers to dealers as intermediate (1)
- Meanings of final and intermediate goods (½ + ½)
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OR
Q14(b) · 4 marks · Long answerCompetency-basedNational Income Accounting
Answer the following.
1. (i)
  Define Gross Investments.
  1 mark
2. (ii)
  Identify any two components of Gross Investments indicated in the given image.
  1 mark
3. (iii)
  Briefly explain any one component of Gross Investments.
  2 marks
Figure in the paper: Image titled 'GROSS INVESTMENTS' with three panels: Panel A shows a crane building a bridge/flyover (infrastructure construction); Panel B shows residential houses; Panel C shows a warehouse/godown with stacked goods (inventory). See it in the official paper.
Try it first, then show our solutionSolution
1. (i) Gross investment is the total addition to the capital stock during a period, including the replacement of capital worn out (depreciation): gross investment = net investment + depreciation.
  1 mark
2. (ii) The image (a crane building a flyover, residential houses, and a warehouse of stocked goods) shows gross public investment and gross residential construction investment (also inventory investment).
  1 mark
3. (iii) Gross public investment is spending by the government on creating fixed assets such as roads, flyovers, bridges and dams. (Or: residential construction investment is spending on building houses; inventory investment is the change in stocks of goods.)
  2 marks
Answer: (i) Addition to capital stock including depreciation. (ii) Public investment and residential construction (also inventory). (iii) Public investment: government spending on assets like roads and dams.
Where the marks are
- Definition of gross investment (1)
- Two components identified (½ + ½)
- One component explained (2)
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Q15 · 4 marks · Case-basedCompetency-basedMoney and Banking
Read the following text carefully :
"With an objective to improve the growth momentum by stimulating domestic private consumption and investment, the Reserve Bank of India (RBI) announced a reduction in Cash Reserve Ratio (CRR) by 100 basis points (1%)."
Based on the above text and common understanding, answer the following questions :
1. (i)
  Explain the likely cause behind the step taken by the Reserve Bank of India (RBI).
  2 marks
2. (ii)
  Briefly explain the impact of the step taken by the Reserve Bank of India (RBI) on the Aggregate Demand (AD).
  2 marks
Try it first, then show our solutionSolution
1. (i) The likely cause is deficient demand: private consumption and investment were weak, slowing growth. A CRR cut aims to stimulate consumption and investment and so correct deficient demand (deflationary pressure).
  2 marks
2. (ii) Lower CRR means banks must keep a smaller share of deposits with the RBI, so more funds are available to lend. Their credit-creating capacity rises, loans become easier and cheaper, money supply rises, and consumption and investment spending rise, increasing aggregate demand.
  2 marks
Answer: (i) To remove deficient demand by stimulating consumption and investment. (ii) Lower CRR raises banks' lendable funds and credit, so AD rises.
Where the marks are
- Cause: deficient demand (2)
- Impact: more credit, higher AD (2)
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Answer one of these 2 alternatives.
Q16(a) · 6 marks · Long answerCompetency-basedDetermination of Income and Employment
Assume, for a hypothetical economy, the following data is given :
Income (Y) Consumption (C) Investment (I) Aggregate Demand (AD)
0 40 20 60
100 120 20 –
200 200 20 –
300 280 20 300
1. (i)
  Calculate the missing values in the given schedule.
  1 mark
2. (ii)
  Define the term 'Effective Demand'.
  2 marks
3. (iii)
  On the basis of the given data, it can be said that the equilibrium level of income is 200.
  Do you agree ? If not, explain the adjustment mechanism that may take place to attain equilibrium level of income.
  3 marks
Try it first, then show our solutionSolution
1. (i) AD = C + I. At Y = 100: AD = 120 + 20 = 140. At Y = 200: AD = 200 + 20 = 220.
  1 mark
2. (ii) Effective demand is the level of aggregate demand at which it equals aggregate supply, i.e. the AD that determines the equilibrium level of income and output.
  2 marks
3. (iii) No. At Y = 200, AD = 220 > AS = 200, so it is not equilibrium; equilibrium is where AD = Y, i.e. at Y = 300 (AD = 300).
  1 mark
4. (iii) When planned AD exceeds planned output, firms' inventories fall below the desired level. Firms expand production and employment to restore stocks, so output and income rise until AD = AS at 300.
  2 marks
Answer: (i) AD = 140 and 220. (ii) Effective demand is AD equal to AS. (iii) No: at 200, AD (220) > AS; output rises until equilibrium at 300.
Where the marks are
- Missing values (½ + ½)
- Effective demand defined (2)
- Disagree and adjustment mechanism (marked as a whole, 3)
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OR
Q16(b) · 6 marks · Long answerDetermination of Income and Employment
Suppose, in an economy, every ₹ 1 increase in investment expenditure leads to an increase of ₹ 4 in the National Income.
Calculate the following :
1. (i)
  Value of Investment Multiplier (K).
  1 mark
2. (ii)
  Change in consumption expenditure, if the income changes from ₹ 400 to ₹ 500.
  3 marks
3. (iii)
  "Sum of Marginal Propensity to Consume (MPC) and Marginal Propensity to Save (MPS) is always equal to one."
  Justify the given statement with the help of a suitable argument.
  2 marks
Try it first, then show our solutionSolution
1. (i) K = ΔY/ΔI = 4/1 = 4.
  1 mark
2. (ii) K = 1/(1 − MPC), so 4 = 1/(1 − MPC), giving 1 − MPC = 0.25 and MPC = 0.75.
  1½ marks
3. (ii) ΔY = 500 − 400 = 100. ΔC = MPC × ΔY = 0.75 × 100 = ₹ 75.
  1½ marks
4. (iii) Income is either consumed or saved: Y = C + S, so ΔY = ΔC + ΔS. Dividing both sides by ΔY: 1 = ΔC/ΔY + ΔS/ΔY = MPC + MPS. So MPC + MPS is always 1.
  2 marks
Answer: (i) K = 4. (ii) MPC = 0.75, so ΔC = ₹ 75. (iii) ΔY = ΔC + ΔS, so MPC + MPS = 1.
Where the marks are
- K = 4 (1)
- MPC = 0.75 from K (1½)
- ΔC = ₹ 75 (1½)
- MPC + MPS = 1 derived (2)
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Q17 · 6 marks · Case-basedCompetency-basedGovernment Budget and the Economy
Read the following passage carefully :
According to the Economic Survey 2024 – 25, the government's budget projections for the fiscal year 2025 – 26 indicate that gross direct tax revenue will rise by 12·7%, while gross indirect tax collections are expected to grow by 8·3% relative to FY 2024 – 25.
Direct taxes include income tax and corporate tax, reflecting earnings and profits of households and firms. It plays a key role in revenue growth of the government. Indirect taxes encompass Goods and Service Tax (GST), custom duties and other transaction-based levies.
Higher growth rate projected for direct taxes suggests a push to enhance tax buoyancy through improved compliance and reforms. On the other hand, indirect taxes are expected to benefit from consumption trends and Goods and Services Tax (GST) administration improvements. The balance tax strategy aims to mobilise resources while supporting fiscal consolidation and sustainable economic growth.
On the basis of the above passage and common understanding, answer the following questions :
1. (i)
  Differentiate between the two types of taxes indicated in the above text, with suitable examples.
  4 marks
2. (ii)
  Elaborate the likely consequences of the tax projections made by the government.
  2 marks
Try it first, then show our solutionSolution
1. (i) The two taxes are direct taxes and indirect taxes. A direct tax is one whose impact and incidence fall on the same person: the person who pays it bears it and cannot shift it.
  1½ marks
2. (i) Example of a direct tax: income tax (or corporation tax).
  ½ mark
3. (i) An indirect tax is one whose impact and incidence can fall on different persons: it is paid by a seller but shifted to buyers through prices.
  1½ marks
4. (i) Example of an indirect tax: Goods and Services Tax (GST) (or customs duty).
  ½ mark
5. (ii) Faster growth of direct taxes (12.7%) reflects a push for tax buoyancy through better compliance and reforms, while indirect taxes (8.3%) gain from consumption and better GST administration. Together they strengthen the revenue base, support fiscal consolidation and help sustainable growth.
  2 marks
Answer: (i) Direct taxes (e.g. income tax) cannot be shifted; indirect taxes (e.g. GST) can be shifted. (ii) Better compliance and consumption raise revenue, supporting fiscal consolidation and growth.
Where the marks are
- Direct tax meaning and example (1½ + ½)
- Indirect tax meaning and example (1½ + ½)
- Consequences of the projections (marked as a whole, 2)
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Income (Y)	Consumption (C)	Investment (I)	Aggregate Demand (AD)
0	40	20	60
100	120	20	–
200	200	20	–
300	280	20	300

Section B

Indian Economic Development: MCQ 18-27, others mixed marks

Q18 · 1 mark · MCQEmployment: Growth, Informalisation and Other Issues
Working persons engaged in various industrial divisions can be classified into three major sectors — Primary sector, secondary sector and tertiary sector.
Identify, which of the following option demonstrates the primary sector.
1. (A)Agriculture
2. (B)Agriculture, mining and quarrying
3. (C)Agriculture, electricity, gas and water supply
4. (D)Transport and storage
Try it first, then show our solutionSolution
1. The primary sector covers activities that use natural resources directly.
2. In the classification of workers by industrial division, it includes agriculture (with forestry and fishing) and mining and quarrying. Electricity, gas and water supply are secondary; transport and storage are tertiary. Option (B).
  1 mark
Answer: (B) Agriculture, mining and quarrying
Where the marks are
- Primary sector = agriculture plus mining and quarrying (1 mark)
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Q19 · 1 mark · MCQCompetency-basedIndian Economy on the Eve of Independence
Read the following statements carefully :
Statement I : The colonial government had dual objectives behind the systematic deindustrialization of India.
Statement II : The British reduced India to a mere importer of raw materials for the its modern industries.
In the light of the given statements, choose the correct option from the following :
1. (A)Statement I is true and Statement II is false.
2. (B)Statement I is false and Statement II is true.
3. (C)Both Statements I and II are true.
4. (D)Both Statements I and II are false.
Try it first, then show our solutionSolution
1. Statement I is true: deindustrialisation had a twofold motive: to make India a supplier of raw materials for Britain's industries and a market for Britain's finished goods.
2. Statement II is false: India became an exporter of raw materials (and an importer of finished goods), not an importer of raw materials. Option (A).
  1 mark
Answer: (A) Statement I is true and Statement II is false.
Where the marks are
- Dual motive true; India exported, not imported, raw materials (1 mark)
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Q20 · 1 mark · MCQEmployment: Growth, Informalisation and Other Issues
The following table shows the distribution of population and workers in a village :
Total population Number of people who are willing and able to work Number of people who are employed
2000 1200 800
The Worker – Population ratio for village would be __________%. (Choose the correct option to fill in the blank)
1. (A)80
2. (B)40
3. (C)60
4. (D)20
Try it first, then show our solutionSolution
1. Worker–population ratio = (Number of workers / Total population) × 100.
2. Workers are the 800 employed persons: 800/2,000 × 100 = 40%. (The 1,200 willing and able to work form the labour force, not the workforce.) Option (B).
  1 mark
Answer: (B) 40
Where the marks are
- WPR = 800/2000 × 100 = 40% (1 mark)
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Q21 · 1 mark · MCQEnvironment and Sustainable Development
Identify, which of the following is not a strategy of sustainable development. (Choose the correct option)
1. (A)Use of Solar Panels
2. (B)Use of Bio-Pests
3. (C)Use of coal to produce electricity
4. (D)Use of Mini-Hydel Plants
Try it first, then show our solutionSolution
1. Sustainable development strategies use renewable, non-polluting resources: solar panels, bio-pest control and mini-hydel plants all qualify.
2. Burning coal for electricity uses a non-renewable resource and causes pollution, so it is not a sustainable strategy. Option (C).
  1 mark
Answer: (C) Use of coal to produce electricity
Where the marks are
- Coal is non-renewable and polluting (1 mark)
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Q22 · 1 mark · MCQRural Development
In the rural areas, diversification towards new areas such as livestock, fisheries and other non-agricultural activities is necessary to __________.
(i) Reduce the risk from agricultural sector
(ii) Provide unsustainable livelihood options
(iii) Provide supplementary employment
(Choose the correct option to fill in the blank)
1. (A)Only (i)
2. (B)(i) and (ii)
3. (C)(i) and (iii)
4. (D)(i), (ii) and (iii)
Try it first, then show our solutionSolution
1. Diversification into livestock, fisheries and non-farm activities reduces the risk of depending only on agriculture (i) and provides supplementary jobs and income (iii).
2. Statement (ii) is wrong because diversification is meant to give sustainable livelihood options, not unsustainable ones. Option (C).
  1 mark
Answer: (C) (i) and (iii)
Where the marks are
- Diversification reduces risk and gives supplementary employment (1 mark)
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Q23 · 1 mark · MCQRural Development
Self-Help Groups (SHGs) have emerged to fill the gap in the formal credit system as they ____________. (Choose the correct option to fill in the blank)
1. (A)Provide loan after obtaining suitable collateral
2. (B)Lend at a high rate of interest
3. (C)Promote thrift in larger proportions
4. (D)Generally provide collateral-free credit to their members
Try it first, then show our solutionSolution
1. Poor rural households often cannot offer collateral, so formal banks do not lend to them.
2. SHGs pool members' small savings and lend to members, generally without collateral and at reasonable interest, filling this gap in formal credit. Option (D).
  1 mark
Answer: (D) Generally provide collateral-free credit to their members
Where the marks are
- SHGs give collateral-free credit (1 mark)
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Q24 · 1 mark · MCQIndian Economy 1950-1990
___________ was set up by the Government of India in 1950 to formulate plans for the most effective and balanced utilisation of resources. (Choose the correct option to fill in the blank)
1. (A)NITI Aayog
2. (B)Planning Commission
3. (C)Karve Committee
4. (D)World Trade Organisation
Try it first, then show our solutionSolution
1. In 1950 the Government of India set up the Planning Commission, chaired by the Prime Minister, to formulate five-year plans.
2. NITI Aayog replaced it only in 2015; the Karve Committee (1955) dealt with small-scale industries; the WTO is an international body. Option (B).
  1 mark
Answer: (B) Planning Commission
Where the marks are
- Planning Commission set up in 1950 (1 mark)
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Q25 · 1 mark · MCQIndian Economy on the Eve of Independence
The export surplus during the colonial rule was used by the Britishers to _________.
(i) Bring gold and silver to India
(ii) Incur expenses on war
(iii) Import invisible items
(Choose the correct option to fill in the blank)
1. (A)Only (i)
2. (B)(i) and (ii)
3. (C)(i) and (iii)
4. (D)(ii) and (iii)
Try it first, then show our solutionSolution
1. The export surplus under colonial rule did not bring gold or silver into India.
2. It was used to pay for the expenses of the office in Britain set up by the colonial government, expenses on wars fought by the British government (ii), and imports of invisible items (iii). Option (D).
  1 mark
Answer: (D) (ii) and (iii)
Where the marks are
- Export surplus used for war expenses and invisibles (1 mark)
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Q26 · 1 mark · Assertion-reasonCompetency-basedComparative Development Experiences of India and its Neighbours
Read the following statements : Assertion (A) and Reason (R). Choose the correct option from those given below :
Assertion (A) : India is a member of various regional and economic groupings such as BRICS, G20, etc.
Reason (R) : Membership of economic and regional groupings helps a nation to understand their strengths and weaknesses in comparison to other nations.
1. (A)Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of the Assertion (A).
2. (B)Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of the Assertion (A).
3. (C)Assertion (A) is true, but Reason (R) is false.
4. (D)Assertion (A) is false, but Reason (R) is true.
Try it first, then show our solutionSolution
1. Assertion: True. India is a member of regional and global economic groupings such as SAARC, BRICS and G20.
  Reason: True. Such groupings let members compare their development with other nations and understand their own strengths and weaknesses.
2. This is why nations join such groupings, so R correctly explains A. Option (A).
  1 mark
Answer: (A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).
Where the marks are
- Truth of A and R and the link between them (1 mark)
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Q27 · 1 mark · MCQHuman Capital Formation in India
In 2009, the Government of India came up with the ________ to make free education, a fundamental right for all children in the age group of 6 – 14 years. (Choose the correct option to fill in the blank)
1. (A)Mid-Day Meal Scheme
2. (B)Jan Dhan Yojana
3. (C)Tapas Majumdar Committee
4. (D)Right to Education Act
Try it first, then show our solutionSolution
1. In 2009 Parliament passed the Right of Children to Free and Compulsory Education Act (RTE Act).
2. It made free and compulsory education a fundamental right for all children aged 6–14 years. Option (D).
  1 mark
Answer: (D) Right to Education Act
Where the marks are
- RTE Act, 2009 (1 mark)
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Q28 · 3 marks · Short answerIndian Economy 1950-1990
Explain the Planning objective of "Growth with Equity".
Try it first, then show our solutionSolution
1. Growth means an increase in the country's capacity to produce goods and services (a rise in GDP). Equity means reducing inequalities of income and wealth so that the benefits reach all sections.
  1½ marks
2. The planning objective of growth with equity means that a rise in GDP is not enough; the benefits of development must be shared by the poor too. Planners treated both a high growth rate and equitable distribution as equally important, so growth with equity became a goal of Indian planning.
  1½ marks
Answer: Growth with equity means raising GDP while ensuring its benefits reach all sections of society by reducing inequality.
Where the marks are
- Explanation of growth, equity and why both matter (marked as a whole, 3)
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Answer one of these 2 alternatives.
Q29(a) · 3 marks · Short answerComparative Development Experiences of India and its Neighbours
"At the time of independence, both India and Pakistan inherited similar colonial economic structures. Both the nations adopted many similar economic planning strategies."
Explain any two such similarities in the developmental path of India and Pakistan.
Try it first, then show our solutionSolution
1. Mixed economy: both India and Pakistan followed a mixed economic system, with the public and private sectors working side by side under development planning.
  1½ marks
2. Import substitution: both followed import-substitution industrialisation, protecting domestic industries from foreign competition with tariffs and quotas. (Also: both started five-year plans and both began reforms around 1988–1991.)
  1½ marks
Answer: Both adopted a mixed economy and an import-substitution strategy (also five-year plans and later reforms).
Where the marks are
- Similarity 1 (1½)
- Similarity 2 (1½)
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OR
Q29(b) · 3 marks · Short answerComparative Development Experiences of India and its Neighbours
"In 1958, China launched the Great Leap Forward (GLF) campaign with a definite aim."
1. (i)
  State the rationale behind the introduction of the Great Leap Forward (GLF) campaign.
  2 marks
2. (ii)
  State any two failures of the Great Leap Forward (GLF) campaign.
  1 mark
Try it first, then show our solutionSolution
1. (i) The Great Leap Forward (1958) aimed at rapid, large-scale industrialisation of China. People were encouraged to set up industries in their backyards, and rural people were organised into communes.
  2 marks
2. (ii) Failures: a severe drought caused havoc, killing about 30 million people; and conflicts with the USSR led Russia to withdraw its professionals who had been helping China industrialise.
  1 mark
Answer: (i) Massive industrialisation through backyard industries and communes. (ii) Failed due to severe drought and the withdrawal of Soviet experts.
Where the marks are
- Rationale of GLF (2)
- Two failures (½ + ½)
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Q30 · 4 marks · Long answerCompetency-basedEnvironment and Sustainable Development
Study the following image carefully :
Interpret the given image and comment upon the phenomenon of environmental crisis as a result of changed production and consumption patterns.
Figure in the paper: Infographic titled 'TRIPLE PLANETARY CRISES' with three icons: CLIMATE CHANGE (globe with rising arrows and thermometer), BIODIVERSITY LOSS (bare trees, birds, an elephant), POLLUTION (factory emitting smoke). See it in the official paper.
Try it first, then show our solutionSolution
1. The image shows the "triple planetary crisis": climate change, biodiversity loss and pollution.
  1 mark
2. With the population explosion and the industrial revolution, the demand for resources for production and consumption has gone beyond the rate at which they regenerate, and wastes are generated faster than the environment can absorb them.
  2 marks
3. This strain on the environment's supply and absorptive capacity has intensified climate change, biodiversity loss and pollution, causing today's environmental crisis.
  1 mark
Answer: The image shows climate change, biodiversity loss and pollution: rising production and consumption have exceeded the environment's regenerative and absorptive capacity, causing the crisis.
Where the marks are
- Interpretation of the image and explanation of the crisis (marked as a whole, 4)
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Q31 · 4 marks · Long answerCompetency-basedComparative Development Experiences of India and its Neighbours
On the basis of the given data, comment upon the annual growth of Gross Domestic Product (GDP) of India and China.
Annual Growth of Gross Domestic Product (%), 1980 – 2017
Country 1980 – 90 2015 – 2017 2022
India 5·7 7·3 7·0
China 10·3 6·8 3·0
Pakistan 6·3 5·3 4·8
Try it first, then show our solutionSolution
1. China: after reforms in the late 1970s, China grew at a near double-digit rate (10.3%) in 1980–90, when many countries struggled to grow even 5%.
  1 mark
2. China's growth then slowed to 6.8% in 2015–17 and sharply to 3.0% in 2022.
  1 mark
3. India: India grew at a reasonable 5.7% in 1980–90, and its growth rose to 7.3% in 2015–17 and stayed high at 7.0% in 2022.
  1 mark
4. So China was far ahead in the 1980s, but India has overtaken China's growth rate in recent years (and both now grow faster than Pakistan in 2015–17 and 2022).
  1 mark
Answer: China grew much faster in the 1980s (10.3% vs 5.7%), but its growth slowed to 6.8% and 3.0%, while India's rose to 7.3% and 7.0%, overtaking China.
Where the marks are
- Comment on China's and India's growth over the periods (marked as a whole, 4)
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Answer one of these 2 alternatives.
Q32(a) · 4 marks · Long answerCompetency-basedEmployment: Growth, Informalisation and Other Issues
Rayansh works as a teacher in a school. He receives a fixed monthly salary, social security benefits, paid leave and medical allowances. His friend Mohan works at a small toy shop. He has very little income, he does not have access to provident fund, paid leave or health insurance.
Classify the types of sectors Rayansh and Mohan are working in and highlight the distinction between the two sectors.
Try it first, then show our solutionSolution
1. Rayansh (teacher with fixed salary and benefits) works in the formal sector.
  ½ mark
2. Mohan (toy-shop worker with low income and no benefits) works in the informal sector.
  ½ mark
3. The formal sector covers all public-sector establishments and private establishments employing 10 or more hired workers. Its workers get regular wages and social security such as provident fund, pension, paid leave and medical benefits.
  1½ marks
4. The informal sector covers private establishments with fewer than 10 hired workers (and farmers, the self-employed, etc.). Its workers get no regular income or social security and can be dismissed without compensation.
  1½ marks
Answer: Rayansh: formal sector; Mohan: informal sector. Formal jobs carry regular pay and social security; informal jobs do not.
Where the marks are
- Rayansh in formal sector (½)
- Mohan in informal sector (½)
- Formal sector features (1½)
- Informal sector features (1½)
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OR
Q32(b) · 4 marks · Long answerHuman Capital Formation in India
Answer the following.
1. (i)
  Define 'Human Capital Formation'.
  1 mark
2. (ii)
  Explain 'Expenditure on migration' as a source of human capital formation.
  3 marks
Try it first, then show our solutionSolution
1. (i) Human capital formation is the addition to the stock of human capital (the skills, knowledge and health of people) over a period of time.
  1 mark
2. (ii) People migrate in search of better jobs and higher earnings; for example, engineers and doctors move to places with better opportunities. Migration has costs: transport, a higher cost of living in the new place and the psychic cost of adjusting to a new social setup. Because the higher earnings at the new place outweigh these costs, spending on migration raises the productive use of people's skills and is a source of human capital formation.
  3 marks
Answer: (i) Addition to the stock of human capital over time. (ii) Migration costs are an investment that lets skills earn more, so it builds human capital.
Where the marks are
- Definition (1)
- Migration as a source of human capital (marked as a whole, 3)
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Answer one of these 2 alternatives.
Q33(a) · 6 marks · Long answerIndian Economy 1950-1990
Answer the following.
1. (i)
  "The Industrial Policy Resolution (IPR), 1956 classified all the industries based on state ownership and control in various categories."
  Do you agree with the above statement ? Give valid reasons in support of your answer.
  3 marks
2. (ii)
  "The economic reforms of 1991 adversely affected the Indian agriculture sector."
  Do you agree with the above statement ? Give valid reasons in support of your answer.
  3 marks
Try it first, then show our solutionSolution
1. (i) Yes, I agree. IPR 1956 put industries into three categories. The first category was to be exclusively owned by the state.
  1 mark
2. (i) In the second category the private sector could supplement the public sector, but the state alone would start new units.
  1 mark
3. (i) The third category, the remaining industries, was left to the private sector, but kept under state control through industrial licensing.
  1 mark
4. (ii) Yes, I agree. After 1991, public investment in agriculture, especially in infrastructure such as irrigation and power, fell.
  1 mark
5. (ii) Fertiliser subsidies were reduced, raising the cost of production and hurting small and marginal farmers.
  1 mark
6. (ii) Lower import duties and liberalised trade exposed Indian farmers to international competition (and the shift towards export cash crops raised the prices of food grains).
  1 mark
Answer: (i) Agree: IPR 1956 classified industries into three state-ownership categories. (ii) Agree: lower public investment, reduced subsidies and foreign competition hurt agriculture.
Where the marks are
- Three categories of IPR 1956 (1 each)
- Three reasons agriculture was hurt by reforms (1 each)
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Q33(b) · 6 marks · Long answerLiberalisation, Privatisation and Globalisation: An Appraisal
Answer the following.
1. (i)
  "The Government of India may further divest its stake in Life Insurance Corporation (LIC) in the current financial year."
  In the light of economic reforms since 1991, identify the policy and define the step taken by the government.
  2 marks
2. (ii)
  "India adopted an inward-looking trade strategy during the planning period."
  (I) State any two reasons behind the adoption of this policy. [1]
  (II) Briefly describe any two ways in which the government implemented this policy. [3]
  4 marks
Try it first, then show our solutionSolution
1. (i) The policy is disinvestment (part of privatisation under the 1991 reforms).
  1 mark
2. (i) Disinvestment means the government selling part of its equity in public sector enterprises (here LIC) to the public or private investors.
  1 mark
3. (ii)(I) Reasons for the inward-looking strategy: to replace imports with domestic production (import substitution) and to save scarce foreign exchange.
  1 mark
4. (ii)(II) Tariffs: taxes on imported goods that make them more expensive and discourage their use, protecting domestic producers.
  1½ marks
5. (ii)(II) Quotas: limits on the quantity of a good that can be imported, which restrict imports and protect domestic firms from foreign competition.
  1½ marks
Answer: (i) Disinvestment: selling part of the government's equity in a PSU. (ii) Inward-looking strategy to substitute imports and save foreign exchange; implemented through tariffs and quotas.
Where the marks are
- Policy identified (1)
- Disinvestment defined (1)
- Two reasons (½ + ½)
- Tariffs (1½)
- Quotas (1½)
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Q34 · 6 marks · Case-basedCompetency-basedRural Development
Read the following passage carefully :
Paramparagat Krishi Vikas Yojana (PKVY)
Paramparagat Krishi Vikas Yojana (PKVY) aims at promoting organic farming, in turn resulting in improvement of soil health. It promotes Participatory Guarantee System – India (PGS – India), a simple certification system, where farmers and consumers participate directly in the process.
The scheme proposes to cover additional 6,00,000 hectare area under organic farming till 2025 – 26. The objective is to produce agricultural products free from chemicals and pesticide residues by adopting eco-friendly, low-cost technologies.
Key focus areas of Paramparagat Krishi Vikas Yojana (PKVY) :
• Promote natural resource based integrated and climate resilient sustainable farming systems that ensure maintenance and increase of soil fertility, natural resource conservation, on farm nutrients recycling and minimising dependence on external inputs.
• Reduce farming costs and increase farmers' income through sustainable organic practices.
• Chemical-free and nutritious food for human consumption.
• Protect the environment by using low-cost, traditional and farmer-friendly technologies.
• Help farmers become entrepreneurs through direct market linkages with local and national markets.
On the basis of the above passage and common understanding, answer the following questions :
1. (i)
  Define Organic Farming. Explain any two merits of organic farming.
  3 marks
2. (ii)
  Explain any two thrust areas of Paramparagat Krishi Vikas Yojana (PKVY) in organic farming.
  3 marks
Try it first, then show our solutionSolution
1. (i) Organic farming is a system of farming that restores, maintains and enhances the ecological balance, using organic inputs instead of chemical fertilisers and pesticides.
  1 mark
2. (i) Merit 1: organically grown food is chemical-free and has more nutritional value than food grown with chemicals.
  1 mark
3. (i) Merit 2: it replaces costly agricultural inputs (fertilisers, pesticides) with cheaper, locally produced organic inputs, lowering farming costs (it also improves soil fertility and generates more employment).
  1 mark
4. (ii) Thrust area 1: reduce farming costs and raise farmers' income through sustainable organic practices.
  1½ marks
5. (ii) Thrust area 2: supply chemical-free, nutritious food for human consumption (others: soil fertility and resource conservation, low-cost farmer-friendly technology, direct market linkages).
  1½ marks
Answer: (i) Organic farming restores and maintains ecological balance; merits: nutritious chemical-free food and cheaper inputs. (ii) PKVY thrust areas: lower costs and higher income, chemical-free nutritious food.
Where the marks are
- Definition (1)
- Two merits (1 + 1)
- Two thrust areas (1½ + 1½)
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Total population	Number of people who are willing and able to work	Number of people who are employed
2000	1200	800

Country	1980 – 90	2015 – 2017	2022
India	5·7	7·3	7·0
China	10·3	6·8	3·0
Pakistan	6·3	5·3	4·8

Source: official question paper, cbse.gov.in. Chapter tags and solutions are ours. Spotted a transcription error? Write tosupport@questionbuddy.in.