CBSE Class 12 Economics Term 1 Sample Paper Set A

See below CBSE Class 12 Economics Term 1 Sample Paper Set A with solutions. We have provided CBSE Sample Papers for Class 12 Economics as per the latest paper pattern issued by CBSE for the current academic year. All sample papers provided by our Class 12 Economics teachers are with answers. You can see the sample paper given below and use them for more practice for Class 12 Economics examination.

CBSE Sample Paper for Class 12 Economics Term 1 Set A

Section A

1. Which of the following act of money has removed the problem of lack of double coincidence of wants?
(a) Store of value
(b) Medium of exchange
(c) Unit of account
(d) Standard of deferred payment

2. Read the following statements carefully and choose the correct alternative from the following.
Statement I A budget prepared by the state government is referred to as a union budget.
Statement II Budget always represents estimated values of receipts and expenditures.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

3. Legal reserve ratio in India is equal to ………… .
(a) cash reserve ratio
(b) statutory liquidity ratio
(c) liquidity convertibility ratio
(d) sum of cash reserve ratio and statutory liquidity ratio

4. The gestation period in agriculture is long as it has a natural process and constraint as well. For this reason, farmer need credit on a regular basis and for a variety of purposes. For which period short-term loans are taken for?
(a) Up to 6 month
(b) Between 1 to 5 years
(c) Between 5 to 10 years
(d) None of these

5. Read the following statements carefully and choose the correct alternative from the following.
Statement I The supply curve of foreign exchange is vertical line parallel to Y-axis.
Statement II Supply curve of foreign exchange represents direct relationship with exchange rate and quantity of foreign exchange.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

6. …………… is an estimated expenditure component of government budget which increases assets or settles liabilities.
(a) Non-developmental expenditure
(b) Revenue expenditure
(c) Capital expenditure
(d) Both (a) and (b)

7. The performance of Indian economy during the period of 1950 to 1990 was not as per the expectation. The performance of the different sectors are biased. In few regions, green revolution gave result while in some regions, industrial development was good. Which of the following reasons can be attributed for the same?
(a) Poor planning
(b) Improper implementation
(c) Lack of public participation
(d) All of these

8. Read the following statements carefully and choose the correct alternative from the following.
Statement I Commercial banks are the financial intermediaries between the borrowers and lenders.
Statement II Functioning of commercial banks leads to the motive of profit earning.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

9. Sale of less than 49 per cent of equity holdings of public sector undertaking is known as ……………… .
(a) Privatisation
(b) Token selling
(c) Disinvestment
(d) Both (b) and (c)

10. Exchange rate between US dollar and Indian rupees have changed several times in last couple of years. As per a given data, Rupee-Dollar exchange rate was 71.49 in November 2020 and changed to 72.82 in January 2021. This leads to which of the following situations?
(a) Decrease in exports from India
(b) Increase in exports from India
(c) Increase in exports from USA
(d) Both (a) and (c)

11. ………… institution(s) is/are part of formal sector lending in rural banking.
(a) Commercial banks
(b) Regional rural banks
(c) Cooperative societies
(d) All of these

12. In ………… five-year plan, India focused upon development of human capital.
(a) fifth
(b) sixth
(c) seventh
(d) None of these

13. Which of the following is not an objective of economic planning in India?
(a) Economic growth
(b) Self-reliance
(c) Full employment
(d) Equity

14. …………… deficit shows the excess of government expenditures other than burden of
interest payment on loans.
(a) Revenue
(b) Fiscal
(c) Budgetary
(d) Primary

15. Read the following statements carefully and choose the correct alternative from the following.
Statement I Operation flood is also known as Milk Revolution.
Statement II Punjab has the success story of implementation of milk cooperatives in the state and earn significant profits.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

16. Indian companies have become multinational due to ………… policy measures.
(a) privatisation
(b) globalisation
(c) Both (a) and (b)
(d) None of these

17. Government tries to improve the system of agricultural marketing system through ………… .
(a) control
(b) regulation
(c) Both (a) and (b)
(d) Neither (a) nor (b)

18. Read the following statements carefully and choose the correct alternative from the following.
Statement I Money multiplier is the reverse of the total reverse requirement.
Statement II Money multiplier is directly proportional with statutory liquidity ratio.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

19. The ability of commercial banks to create currency in an economy is known as ………………
(a) Money creation
(b) Credit creation
(c) Money production
(d) Both (a) and (b)

20. Choose the incorrect pair from given below.

Codes
(a) A – (i)
(b) B – (ii)
(c) C – (iii)
(d) D – (iv)

21. When a company trades with multiple countries in the world, it is known as ………… .
(a) Bi-lateral trade
(b) Multi-lateral trade
(c) Domestic trade
(d) International trade

22. Which of the following types of taxes is/are generally proportional in nature?
(a) Direct tax
(b) Indirect tax
(c) Both (a) and (b)
(d) Neither (a) nor (b)

23. ………… is responsible to regulate the health infrastructure of the country.
(a) ICMR
(b) AICTE
(c) NCERT
(d) None of these

24. Labour and entrepreneurs are two important factors of production, these two comes under …………… .
(a) physical capital
(b) human capital
(c) Both (a) and (b)
(d) None of these

Section B

25. Read the following statements carefully and choose the correct alternative from the following.
Statement I AICTE is the facilitator of health sector in India.
Statement II Migration of people from rural to urban areas is known as brain drain.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

26. Assertion (A) Cooperative marketing is an effective way of removing the middlemen and giving farmers a fair price.
Reason (R) Regulated markets give the farmers a protective environment free from various forms of manipulation.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

27. Which of the following is/are true about revenue receipts of the government?
(a) It either creates assets or reduces liabilities
(b) It is recurring in nature
(c) It is spent on the routine functioning
(d) Both (b) and (c)

28. The part of agricultural produce sold in the market by the farmers is known as
(a) Surplus stock
(b) Marketed surplus
(c) Buffer stock
(d) None of these

29. Assertion (A) The incidence of poverty has declined faster in rural areas as compared to urban areas in past few decades in India.
Reason (R) Economic growth during 1990s played a major role in reduction of poverty in the country.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

30. Read the following statements carefully and choose the correct alternative from the following.
Statement I In the year of great divide, India officially entered into second phase of demographic profile.
Statement II Population explosion started in India since 1921.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

31. Reserve Bank of India does not deal with ………… .
(a) commercial banks
(b) local level government
(c) central government
(d) general public

32. Assertion (A) Globalisation has led to not only expansion of market but also led to greater choice for consumers.
Reason (R) In the present period due to competition between firms, consumers gets greater choice at low price.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

33. ………… form of capital is marketable in nature.
(a) Physical
(b) Human
(c) Both (a) and (b)
(d) Neither (a) nor (b)

34. The structural reforms during 1991 includes which of the following policy measures?
(a) Short-term policies
(b) Long-term policies
(c) Both (a) and (b)
(d) None of the above

35. Assertion (A) Human capital formation implies the development of abilities and skills among the population of the country.
Reason (R) Formation of human capital is a long-term and continuous process.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

36. Assertion (A) Absolute poverty is prevent only in developed country.
Reason (R) As the country develops, the income inequalities necessarily increases.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Both are false

37. A tariff imposed by the government on foreign trade leads to ……… .
(a) increase in demand of foreign exchange
(b) decrease in demand of foreign exchange
(c) Either (a) or (b)
(d) Neither (a) nor (b)

38. Choose the incorrect statement from the given below
(a) The head count ratio is used to count the number of poor people in the country
(b) Poverty in urban areas has reduced at a lesser rate than in urban areas
(c) Underdevelopment intensifies the poverty in the country
(d) Poor families have lower family sizes

39. Assertion (A) The overseas investment leads to surplus in capital account of balance of payments.
Reason (R) Foreign investments are considered as inflows and recorded on the credit side of capital account.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

40. Read the following statements carefully and choose the correct alternative from the following.
Statement I Reducing the burden of the public sector is known as privatisation.
Statement II Opening up of economies during new economic reforms adversely affected the small manufacturers.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

41. ………… is known as a dirty floating exchange rate.
(a) Fixed exchange rate
(b) Floating exchange rate
(c) Managed floating exchange rate
(d) None of these

42. Choose the incorrect pair from given below.

Codes
(a) A – (i)
(b) B – (ii)
(c) C – (iii)
(d) D – (iv)

43. Assertion (A) In pre-independence period, land settlement systems were major cause of the agricultural stagnation.
Reason (R) Zamindars were the large land owners who served as the intermediaries between the government and actual tillers of the soil.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

44. Public expenditure plays a significant role in restoring economic stability, particularly when there is an economic recession. In such situation, the aggregate demand in the economy falls, which further leads to fall in employment in the economy. Which of the following step government should take to deal with this situation?
(a) Increase tax rates
(b) Decrease government expenditure
(c) Increase government spending
(d) Both (a) and (b)

45. Assertion (A) The supply of money in the economy at a given point of time is a stock variable.
Reason (R) A variable, which is measured at point of time, is considered as a stock variable.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

46. Choose the incorrect pair from given below.

Codes
(a) A – (i)
(b) B – (ii)
(c) C – (iii)
(d) D – (iv)

47. Assertion (A) Disinvestment is a capital receipt of government budget as it leads to creation of liabilities.
Reason (R) The process of selling a part of equity holdings of public sector undertakings are referred to as disinvestment.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

48. Observe the picture given below.

As per the data given above, by what percent primary completion rate among female have increased between 1990 to 2005-10?
(a) 45.23%
(b) 55.73%
(c) 63.28%
(d) 76.32%

Section C

Direction : – Read the following case study and answer questions 49 to 54 on the basis of the same.
While India did gain its independence from British rule in 1947, the country still suffers from extreme poverty today. India has the largest number of poor people in one country of its nearly one billion inhabitants about 350 million live in poverty. The division of resources and wealth is very uneven. For example, Delhi, Punjab, both urban areas have very low poverty rates. On the other hand, in rural cities of Bihar and Odisha, 40 to 50 percentage of the population lives in destitution, among the world‘s most extreme rates.
Eradication of poverty can only be a long-termgoal in India. Poverty in India is caused bymultiple factors. India was already in a poor state after becoming independent from Britain. However, overpopulation tends to be the leading reason as there are poor employment opportunities in villages, people moved to city‘s leading to crowded streets and unhealthy living conditions.

49. Eradication of poverty is a long objective of the government due to which of the following reasons?
(a) Poor policy formation
(b) Lack of resources
(c) Huge size of population
(d) All of these

50. Assertion (A) India’s fight against the poverty have faced a major setback on account of lack of public participation.
Reason (R) The exploitation by the British government has intensified the state of poverty in India post-independence period.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

51. As per the studies, it has been found that poverty in urban areas has declined at a slower pace as compared to rural areas due to which of the following reasons?
(a) Constant migration from rural to urban areas
(b) Better implementation of poverty alleviation programmes in rural areas
(c) Both (a) and (b)
(d) None of these

52. Read the following statements carefully and choose the correct alternative from the following.
Statement I India has the highest population living below poverty line in absolute terms in the world.
Statement II Causes of poverty are deep routed in India as there are social and cultural factors also responsible for poverty among the people.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

53. Indian government’s approach to deal with poverty is said to be multi-dimensional.
Which of the following are the dimensions of poverty?
(i) Growth orientation (ii) Minimum basic needs
(iii) Provision of education and health for all (iv) Poverty alleviation programmes
(a) (i), (iii) and (iv)
(b) (ii), (iii) and (iv)
(c) (i), (ii) and (iv)
(d) All of these

54. India has experienced a regional imbalance in poverty reduction in the whole country.
Which of the following states have poverty greater than national average?
(a) Bihar
(b) Odisha
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Direction : – Read the following case study and answer questions 55 to 60 on the basis of the same.
According to the data released by the Controller General of Accounts (CGA), fiscal deficit during April-August was at 109.3% of the annual target estimated in the budget. In absolute terms, the fiscal deficit was at ₹ 8,70,347 crore. It stood at 78.7% of Budget Estimates (BE) in the corresponding period of the last fiscal.
Fiscal deficit or the gap between expenditure and revenue had breached the annual target in July. The government had pegged fiscal deficit for 2020-21 at ₹ 7.96 lakh crore or 3.5 percent of GDP in the budget presented by Finance Minister Nirmala Sitharaman in February, 2020. Source The Economic Times, 30th September, 2020.

55. What is the amount of borrowing for the period between April–August, 2019-20 in absolute terms?
(a) 109.3 percent of the annual target
(b) ₹ 8,70,347 crores
(c) ₹ 7.96 lakh crores
(d) Can’t be predicted

56. Read the following statements carefully and choose the correct alternative from the following.
Statement I Fiscal deficit creates debt trap for the government.
Statement II Fiscal deficit can be reduced by making payment of interest due to loans.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

57. Assertion (A) Fiscal deficit is excess of total revenue over total expenditure.
Reason (R) Total government receipts are comprised of debt creating receipts and non-debt creating receipts.
Alternatives
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

58. ………… is the correct formula of fiscal deficit.
(a) Primary deficit + Interest payments
(b) Revenue deficit + Interest payments
(c) Primary deficit − Interest payments
(d) Revenue deficit − Interest payments

59. Which of the following is/are implications for fiscal deficit?
(a) Lower future growth
(b) Inflation
(c) Foreign dependency
(d) Both (a) and (c)

60. Which of the ways can help to reduce fiscal deficit?
(a) Reducing non-development expenditures
(b) Settling the previous loans
(c) Increasing taxes
(d) All of these