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Read the following… (Class 12 Economics SQP 2023-24, Q22)

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

CBSE Class 12 Economics sample paper 2023-24: question 22

From the official CBSE sample question paper for 2023-24, section B, question 22, for 1 mark. Try it first; the hints and our step-by-step solution are below.

Q22 · 1 mark · Assertion-reasonCompetency-basedLiberalisation, Privatisation and Globalisation: An Appraisal

Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative from those given below.
Assertion (A): In 1991, as an immediate measure to resolve the Balance of Payments crisis, the rupee was devalued against foreign currencies.
Reason (R): Devaluation of currency was eminent, to replenish the deteriorated foreign exchange reserves.

  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.

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

Why were reserves so low in 1991?

Hint 2

How does devaluation bring foreign exchange in?

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. Assertion: True. Faced with the 1991 BoP crisis, the government devalued the rupee against foreign currencies as an immediate measure.

    Reason: True. Devaluation was essential ("imminent") because foreign exchange reserves had fallen very low; it made exports cheaper and helped increase the inflow of foreign exchange.

  2. R gives the reason for A. Both are true and R 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)

Revise the chapter

Practise this chapterBoard-style questions from Liberalisation, Privatisation and Globalisation: An Appraisal, 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.