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Read the following… (Class 12 Economics SQP 2023-24, Q10)

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EconomicsCBSE Class 12 · Sample paper, session 2023-24 · 1 mark · MCQ

CBSE Class 12 Economics sample paper 2023-24: question 10

From the official CBSE sample question paper for 2023-24, section A, question 10, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q10 · 1 mark · MCQCompetency-basedOpen Economy Macroeconomics

Read the following chart carefully and choose the correct alternative:

  1. (A)Interest received on loans
  2. (B)Multilateral Loans
  3. (C)Portfolio Investment
  4. (D)Government Aid

Figure in the paper: Flow chart: 'Capital Account' at top branches into three boxes: 'Investments', 'External Borrowings', 'External Assistance'. 'Investments' branches into two boxes: 'Direct Investment' and a blank box (_______). See it in the official paper.

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2023-24.

Hints

Open one hint at a time and try again before the next.

Hint 1

What are the two types of foreign investment?

Hint 2

Interest is income, so it is in the current account.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. The chart splits the capital account into investments, external borrowings and external assistance, and splits investments into direct investment and a blank.

  2. Foreign investment is either direct or portfolio investment. (Interest received is a current account item; multilateral loans and government aid fall under borrowings and assistance.) Option (C).

    1 mark

Answer: (C) Portfolio Investment

Where the marks are

  • Investments = direct + portfolio (1 mark)

Revise the chapter

Practise this chapterBoard-style questions from Open Economy Macroeconomics, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2023-24: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.