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Answer the… (Class 12 Economics SQP 2023-24, Q16C,D)

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EconomicsCBSE Class 12 · Sample paper, session 2023-24 · 6 marks · Long answer

CBSE Class 12 Economics sample paper 2023-24: question 16(C,D)

From the official CBSE sample question paper for 2023-24, section A, question 16(C,D), for 6 marks. Try it first; the hints and our step-by-step solution are below.

Q16(C,D) · 6 marks · Long answerCompetency-basedGovernment Budget and the Economy

Answer the following.

  1. (C)

    Explain the economic stability objective of Government Budget.

    3 marks
  2. (D)

    ‘Under the Ayushmaan Bharat Scheme, the Government provides free medicines to the economically backward section of the society’.
    Identify and discuss the nature of the government expenditure indicated in the given statement.

    3 marks

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 should the government do with taxes during inflation?

Hint 2

Does giving free medicines create a government asset?

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. (C) An economy faces fluctuations in income, employment and prices. These depend on the level of aggregate demand, which depends on the spending of households and firms.

    1½ marks

  2. (C) To stabilise the economy, the government uses the budget: in inflation it cuts its spending and/or raises taxes to reduce AD; in deflation it raises spending and/or cuts taxes to raise AD.

    1½ marks

  3. (D) Spending on free medicines under Ayushmaan Bharat is revenue expenditure.

    1 mark

  4. (D) It neither creates an asset nor reduces a liability of the government; it is a recurring welfare (transfer-type) expenditure.

    2 marks

Answer: (C) The budget adjusts taxes and spending to smooth fluctuations in income, employment and prices. (D) Revenue expenditure: no asset created, no liability reduced.

Where the marks are

  • Economic stability explained (3)
  • Revenue expenditure identified and explained (3)

Revise the chapter

Practise this chapterBoard-style questions from Government Budget and the Economy, 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.