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Refer the given image… (Class 12 Economics 2026, Q15)

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EconomicsCBSE Class 12 · Board exam 2026, set 58/1/1 · 4 marks · Short answer

CBSE Class 12 Economics 2026: question 15

Set in the CBSE Class 12 board exam of 2026, paper 58/1/1, section A, question 15, for 4 marks. Try it first; the hints and our step-by-step solution are below.

Q15 · 4 marks · Short answerCompetency-basedMoney and Banking

Refer the given image carefully :

Explain any two measures that can be taken by the Central Bank to control the indicated macroeconomic problem.

Figure in the paper: A weighing balance tilted: the left pan (holding goods) is raised/higher with up arrows labelled 'General Price level'; the right pan (holding coins) is lower, with down arrows labelled 'Value of Money' above it. See it in the official paper.

Source: official question paper from cbse.gov.in (PDF). See it in the full 2026 board paper, set 58/1/1.

Hints

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

Hint 1

What happens to the value of money when prices rise?

Hint 2

Which tools make credit dearer or scarcer?

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 image shows the general price level rising and the value of money falling: the problem indicated is inflation (excess demand).

  2. Raise the repo rate: commercial banks borrow from the RBI at a higher cost, so they raise their lending rates. Credit becomes dearer, borrowing for consumption and investment falls, aggregate demand falls and the price rise is checked.

    2 marks

  3. Open market operations (sale of securities): the central bank sells government securities in the open market. Buyers pay with bank funds, so banks' reserves and their capacity to create credit fall. Lending and aggregate demand fall, controlling inflation. (Raising CRR or SLR works the same way by reducing lendable funds.)

    2 marks

Answer: The problem is inflation; the central bank can raise the repo rate and sell government securities (OMO) to reduce credit and aggregate demand.

Where the marks are

  • Repo rate raised: credit dearer, AD falls (2)
  • OMO sale of securities: bank reserves fall, AD falls (2)

Revise the chapter

Practise this chapterBoard-style questions from Money and Banking, one at a time, marked against the answer key and marking points.Back to the full paper2026 board paper, set 58/1/1: 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.