CUET Economics

Cuet (Common University Entrance Test) For Undergraduate Courses Economics (Code: 309)

Cuet (Common University Entrance Test) For Undergraduate Courses Economics (Code: 309) A.S. Siddiqui CMA from the Institute of Cost Accountants of India, MBA from Indian Institute of Management, Bangalore, B.Com. (Hons.) from Delhi University New Delhi   LAXMI PUBLICATIONS (P) LTD (An ISO 9001:2015 Company) BEngalURU  • Chennai • Guwahati • Hyderabad • Jalandhar Kochi  • Kolkata • lucknow • mumbai • Ranchi New Delhi

Cuet (Common University Entrance Test) for UnderGraduate courses–Economics Copyright © by Laxmi Publications Pvt., Ltd. All rights reserved including those of translation into other languages. In accordance with the Copyright (Amendment) Act, 2012, no part of this publication may be reproduced, stored in a retrieval system, translated into any other language or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise. Any such act or scanning, uploading, and or electronic sharing of any part of this book without the permission of the publisher constitutes unlawful piracy and theft of the copyright holder’s intellectual property. If you would like to use material from the book (other than for review purposes), prior written permission must be obtained from the publishers. Printed and bound in India Typeset at : J.R. Enterprises, Delhi. New Edition ISBN : 978-93-94406-27-8 Limits of Liability/Disclaimer of Warranty: The publisher and the author make no representation or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties. The advice, strategies, and activities contained herein may not be suitable for every situation. In performing activities adult supervision must be sought. Likewise, common sense and care are essential to the conduct of any and all activities, whether described in this book or otherwise. Neither the publisher nor the author shall be liable or assumes any responsibility for any injuries or damages arising herefrom. The fact that an organization or Website if referred to in this work as a citation and/or a potential source of further information does not mean that the author or the publisher endorses the information the organization or Website may provide or recommendations it may make. Further, readers must be aware that the Internet Websites listed in this work may have changed or disappeared between when this work was written and when it is read. All trademarks, logos or any other mark such as Vibgyor, USP, Amanda, Golden Bells, Firewall Media, Mercury, Trinity, Laxmi appearing in this work are trademarks and intellectual property owned by or licensed to Laxmi Publications, its subsidiaries or affiliates. Notwithstanding this disclaimer, all other names and marks mentioned in this work are the trade names, trademarks or service marks of their respective owners. & Bengaluru 080-26 75 69 30 & Chennai 044-24 34 47 26 & Guwahati 0361-254 36 69 Branches & Hyderabad 040-27 55 53 83 & Jalandhar 0181-222 12 72 & Kochi 0484-405 13 03 & Kolkata 033-40 04 77 79 & Lucknow 0522-430 36 13 & Ranchi 0651-224 24 64 Published in India by C—00000/022/04 Printed at : N K Book Binder, Tonica. Laxmi Publications (P) Ltd. (An ISO 9001:2015 Company) 113, GOLDEN HOUSE, GURUDWARA ROAD, DARYAGANJ, NEW DELHI - 110002, INDIA Telephone : 91-11-4353 2500, 4353 2501 www.laxmipublications.com [email protected]

Introduction National Testing Agency has been entrusted with the responsibility of conducting the Undergraduate entrance tests for all the Central Universities (CUs) for the academic session 2022–2023. CUET will provide a single window opportunity to students to seek admission in any of the Central Universities (CUs) across the country. The CUET (UG)–2022 will be conducted in Computer Based Test (CBT) Mode. Examination Structure for CUET (UG)–2022: CUET (UG)–2022 will consist of the following four sections:  Section IA – 13 Languages  Section IB – 19 Languages  Section II – 27 Domain Specific Subjects  Section III – General Test Choosing options from each section is not mandatory. Choices should match the requirements of the desired University. Broad features of CUET (UG)–2022: Some features of CUET (UG)–2022 are as follows: Section Subjects/Tests Questions to Question Type Duration be Attempted Section IA– There are 13* different 40 questions to Language to be tested through 45 minutes Languages languages. Any of these be attempted for each languages may be chosen. out of 50 in each Reading Comprehension language language (based on different types of passages–Factual, Literary and Narrative, [Literary Aptitude and Vocabulary] Section IB– There are 19** languages. Languages Any other language apart from those offered in Section I A may be chosen. Section II– There are 27*** Domain 40 questions to • Input text can be used for 45 minutes Domain specific subjects being be attempted for each offered under this section. out of 50 MCQ Based Questions Domain Section III– A candidate may choose specific General a maximum of Six (06) 60 questions to • MCQs based on NCERT subjects Test Domains as desired by be attempted the applicable University/ out of 75 Class XII syllabus only 60 minutes Universities. For any such under- • Input text can be used for graduate programme/ programmes being offered MCQ Based Questions by Universities where a General Test is being used • General Knowledge, Current for admission. Affairs, General Mental Ability, Numerical Ability, Quantitative Reasoning (Simple application of basic mathematical concepts arithmetic/algebra geometry/ mensuration/stat taught till Grade 8), Logical and Analytical Reasoning

* Languages (13): Tamil, Telugu, Kannada, Malayalam, Marathi, Gujarati, Odia, Bengali, Assamese, Punjabi, English, Hindi and Urdu ** Languages (19): French, Spanish, German, Nepali, Persian, Italian, Arabic, Sindhi, Kashmiri, Konkani, Bodo, Dogri, Maithili, Manipuri, Santhali, Tibetan, Japanese, Russian and Chinese. *** DomainSpecificSubjects(27):1.Accountancy/BookKeeping;2.Biology/BiologicalStudies/Biotechnology/ Biochemistry; 3. Business Studies; 4. Chemistry; 5. Computer Science/Informatics Practices; 6. Economics/ Business Economics; 7. Engineering Graphics; 8. Entrepreneurship; 9. Geography/Geology; 10. History; 11. Home Science; 12. Knowledge Tradition and Practices of India; 13. Legal Studies; 14. Environmental Science; 15. Mathematics; 16. Physical Education/NCC/Yoga; 17. Physics; 18. Political Science; 19. Psychology; 20. Sociology; 21. Teaching Aptitude; 22. Agriculture; 23. Mass Media/Mass Communication; 24. Anthropology; 25. Fine Arts/Visual Arts (Sculpture/Painting)/Commercial Arts; 26. Performing Arts– (i) Dance (Kathak/Bharatnatyam/Oddisi/Kathakali/Kuchipudi/Manipuri (ii) Drama-Theatre (iii) Music General (Hindustani/Carnatic/Rabindra Sangeet/Percussion/Non-Percussion); 27. Sanskrit [For all Shastri (Shastri 3 years/4 years Honours) Equivalent to B.A./B.A. Honours courses i.e. Shastri in Veda, Paurohitya (Karmakand), Dharamshastra, Prachin Vyakarana, Navya Vyakarana, Phalit Jyotish, Siddhant Jyotish, Vastushastra, Sahitya, Puranetihas, Prakrit Bhasha,Prachin Nyaya Vaisheshik, Sankhya Yoga, Jain Darshan, Mimansa, AdvaitaVedanta, Vishihstadvaita Vedanta, Sarva Darshan, a candidate may choose Sanskrit as the Domain]. • A candidate can choose a maximum of any 3 languages from Section IA and Section IB taken together. (One of the languages chosen needs to be in lieu of Domain specific subjects). • Section II offers 27 subjects, out of which a candidate may choose a maximum of 6 subjects. • Section III comprises General Test. • For choosing Languages (up to 3) from Section IA and IB and a maximum of 6 subjects from Section II and General Test under Section III, the candidate must refer to the requirements of his/her intended University. Level of questions for CUET (UG)–2022: All questions in various testing areas will be benchmarked at the level of Class XII only. Marking Scheme of Examination For Multiple Choice Questions: To answer a question, the candidates need to choose one option corresponding to the correct answer or the most appropriate answer. However, if any anomaly or discrepancy is found after the process of challenges of the key verification, it shall be addressed in the following manner: (i) Correct answer or the most appropriate answer: Five marks (+ 5) (ii) Any incorrect option marked will be given minus one mark (– 1). (iii) Unanswered/Marked for Review will be given no mark (0). (iv) If more than one option is found to be correct then Five marks (+ 5) will be awarded to only those who have marked any of the correct options. (v) If all options are found to be correct then Five marks (+ 5) will be awarded to all those who have attempted the question. (vi) If none of the options is found correct or a Question is found to be wrong or a Question is dropped then all candidates who have appeared will be given five marks (+ 5). Note: C andidates are advised to visit the NTA CUET (UG)–2022 official website https://cuet.samarth.ac.in/, for latest updates regarding the Examination.

Contents ... 1 ... 5 1. Introductory to Microeconomics 2. Consumer Behaviour and Demand ... 8 ... 13 Introductory Macroeconomics ... 18 ... 22 3. National Income and Related Aggregates ... 26 4. Determination of Income and Employment 5. Money and Banking ... 29 6. Government Budget and the Economy ... 33 7. Balance of Payments ... 43 ... 46 Indian Economic Development ... M-1–M-21 8. Development Experience (1947-90) and Economic Reforms Since 1991 9. Current Challenges Facing Indian Economy 10. Developing Experiences of India Answers Mock Test Papers

Syllabus ECONOMICS/BUSINESS ECONOMICS-309 Note: There will be one Question Paper which will have 50 questions out of which 40 questions need to be attempted. Unit I: Introduction to Microeconomics • What is microeconomics? • Central problems Unit II: Consumer Behaviour and Demand • Consumer’s Equilibrium: meaning and attainment of equilibrium through Utility Approach: One and two commodity cases. • Demand: market demand, determinants of demand, demand schedule, demand curve, movement along and shifts in the demand curve, price elasticity of demand, measurement of price elasticity of demand – percentage, total expenditure, and geometric methods Introductory Macroeconomics Unit III: National Income and Related Aggregates — Basic Concepts and Measurement • Macroeconomics: meaning. • Circular flow of income, concepts of GDP, GNP, NDP, NNP (at market price and factor cost). • Measurement of National Income –Value Added method, Income method, and Expenditure method. Unit IV: Determination of Income and Employment • Aggregate demand, aggregate supply, and their components • Propensity to consume and propensity to save (average and marginal) • Meaning of involuntary unemployment and full employment • Determination of income and employment: two-sector model • Concept of investment multiplier and its working • Problems of excess and deficient demand • Measures to correct excess and deficient demand – availability of credit, change in government spending Unit V: Money and Banking • Money: meaning, evolution, and functions • Central bank: meaning and functions • Commercial banks: meaning and functions

Unit VI: Government Budget and the Economy • Government budget – meaning and its components • Objectives of government budget • Classification of receipts – revenue and capital; classification of expenditure – revenue and capital, plan and non-plan, and developmental and non-developmental • Balanced budget, surplus budget, and deficit budget: meaning and implications • Revenue deficit, fiscal deficit, and primary deficit: meaning and implications; measures to contain different deficits. Unit VII: Balance of Payments • Foreign exchange rate – meaning (fixed and flexible), merits and demerits; determination through demand and supply • Balance of payments accounts – meaning and components • A brief analysis of recent exchange rate issues INDIAN ECONOMIC DEVELOPMENT Unit VIII: Development Experience (1947-90) and Economic Reforms since 1991 A brief introduction of the state of the Indian economy on the eve of independence. Indian economic system and common goals of Five year Plans. Main features, problems and policies of agriculture (institutional aspects and new agricultural strategy), industry (IPR 1956; SSI – role & importance) and foreign trade. Unit IX: Current Challenges Facing the Indian Economy Poverty – absolute and relative; Main programmes for poverty alleviation: A critical assessment; Human Capital Formation – How many people become resource; Role of human capital in economic development; Rural Development: Key issues – credit and marketing – role of cooperatives; agricultural diversification; Employment: Growth and changes in work force participation rate in formal and informal sectors; problems and policies Infrastructure: Meaning and Types: Cases Studies: Health: Problems and Policies – A critical assessment; Sustainable Economic Development: Meaning, Effects of Economic Development on Resources and Environment, including global warming Unit X: Development Experience of India • A comparison with neighbours • India and Pakistan • India and China • Issues: economic growth, population, sectoral development and other Human Development Indicators

Consumer Behaviour and Demand 5 UNIT II Consumer Behaviour and Demand MULTIPLE CHOICE QUESTIONS Choose the correct alternative. 8. Indifference curve slope is: 1. Consumer’s behaviour is studied in: (a) From right to left (a) Microeconomics (b) Macroeconomics (b) From downward to right (c) Income Analysis (d) None of these (c) Both (a) and (b) 2. Who gave the cardinal concept of utility? (d) None of these (a) Marshall (b) Pigou 9. The propounder of law of diminishing marginal utility is: (c) Hicks (d) Samuelson 3. Which of the following is a characteristic of (a) Gossen (b) Adam smith utility? (c) Chapman (d) Hicks (a) Utility is a psychological phenomenon 10. Consumer’s equilibrium is a situation in which a consumer can get ........... satisfaction (b) Utility is subjective from his current level of income (c) Utility is a relative concept (a) Maximum (b) No (d) All of these (c) Less (d) (a) and (c) both 4. When TU becomes Maximum, MU is: 11. The formula of marginal utility is: (a) Positive (b) Negative (a) MUn – 1 – MU1 (b) TUn – TUn – 1 (c) Zero (d) None of these TU (c) MU (d) TU × MU 5. Indifference curve is: 12. In economics term utility means: (a) Convex to the origin (b) Concave to the origin (a) Sorrow (b) Enjoyment (c) Both (a) and (b) (c) Satisfaction (d) (a) and (b) both (d) None of these 13. A consumer can get maximum satisfaction where the ........... are same 6. The ability of satisfying human want in a goods is called its: (a) Total utility and marginal utility (a) Productivity (b) Satisfaction (b) Price of a commodity and marginal (c) Utility (d) Profitability (c) Price of a commodity and total utility 7. Utility can be measured by: (d) (b) and (c) both (a) Money 14. Total utility and marginal utility are same when a consumer takes ........... of a (b) Exchange of goods commodity. (c) Weight of the good (d) None of these (a) 5th Unit (b) 10th Unit (c) 6th Unit (d) 1st Unit 5

6 Economics 15. Which of the following factor affects 24. With which method, elasticity of demand is demand? measured? (a) Price (b) Change in income (a) Total Expenditure Method (c) Taste of the consumer (b) Percentage or Proportionate Method (d) All of these (c) Geometric Method 16. Change in the demand of apples due to (d) All of these increase in its price is ........... of demand. 25. Who propounded the percentage or propor- (a) Contraction (b) Extension tionate method of measuring elasticity of (c) Increase (d) Decrease demand? 17. Change in the demand due to increase in (a) Marshall (b) Flux the income of the consumers is known as ........... of demand. (c) Hicks (d) None of these 26. Which of the following factor affects elasticity (a) Increase (b) Decrease of demand? (c) Extension (d) Contraction (a) Nature of Goods (b) Price Level 18. Increase in the price of ink will ........... the (c) Income Level (d) All of these demand of pen. 27. Indifference curves were first introduced by: (a) Increase (b) Decrease (a) Edge worth (b) Pareto (c) Keep constant (d) No effect (c) Myers (d) Hicks 19. Increase in the demand for wages due to 28. In case of ........... demand, a slight change industrial development is an example of: in the price will make greater changes in (a) Income demand (b) Cross demand demand. (c) Derive demand (a) Perfectly elastic (b) Perfectly inelastic (d) Competitive demand (c) Elastic (d) Inelastic 20. The law of demand is given by: 29. The demand will be ........... if there is no (a) Prof. Marshall (b) Adam Smith change in the demand of the commodity, (c) Prof. Walker (d) J.B. Say in spite of the change in the price of the 21. The father of modern economics is: commodity. (a) Adam Smith (b) Prof. Ragnar (a) Perfectly elastic (b) Elastic (c) Kenneth Boulding (c) Perfectly inelastic (d) Prof. Walker (d) Inelastic 22. The slope of the demand curve of a normal 30. If the demand of the commodity changes goods is: a faster rates than the change in the price (a) Negative (b) Positive of the commodity, the demand of the (c) Zero (d) Undefined commodity will be known as 23. Which of the following is a formula for (a) Perfectly elastic measuring the elasticity of demand? (b) Inelastic Proportionate Change in Demand (c) Perfectly inelastic Proportionate Change in Price (a) (d) Elastic 31. Change in the demand of a commodity due (b) Proportionate Change in Price to change in the price of the substitute is an Proportionate Change in Demand example of Change in Demand (a) Cross elasticity Change in Price (c) (b) Price elasticity (d) None of these (c) Income elasticity (d) None of these

Consumer Behaviour and Demand 7 32. If change in the demand of the commodity 33. Price elasticity of demand means: is equal to change in price, the demand of (a) Change in demand due to change in the commodity will be price (a) Unit elasticity (b) Change in demand (b) Less than unit elasticity (c) Change in real income (c) Perfectly elastic (d) Change in Price (d) Perfectly inelastic CASE BASED QUESTIONS Case Study 1 Read the passage/extract below carefully and answer the questions that follow. Equilibrium means position of rest or position of no change. It can be defined as a balance between two or more variables at same level. Consumer’s equilibrium is the point or situation in which the consumer gets maximum amount of utility or satisfaction. Utility means power of any commodity to satisfy a human want. Since at equilibrium consumer’s satisfaction is maximised therefore he feels no urge to change. He is satisfied with the utility derived from the consumption of goods and services which he purchases after spending money on them. In order to understand the concept of Consumer’s Equilibrium let us understand the concept of total utility, marginal utility and law of diminishing marginal utility etc. 1. Consumer’s equilibrium takes at a point 3. When marginal utility is negative, then total where: utility: (a) MU = Price (b) MU < Price (a) is maximum (c) MU > Price (d) None of these (b) Starts decreasing 2. The capability of a commodity to satisfy (c) increases at decreasing rate human wants is: (d) None of these (a) Consumption (b) Utility 4. How we calculate marginal utility? (a) ∆TU/∆Q (b) ∆MU/∆Q (c) Quality (d) Taste (c) ∆Q/∆TU (d) ∆Q/∆MU Case Study 2 Read the passage/extract below carefully and answer the questions that follow. The fall in the price of Giffen goods does not increase its demand, because the consumer will probably divert the extra purchasing power in purchasing the superior brand of the commodity. In fact, the increase in the income of the consumer due to the fall of the price of the Giffen commodity induces him to purchase lesser quantity of Giffen goods. This situation is also known as Giffen Paradox. The demand for inferior goods such as coarse grain, coarse cloth, inferior meat etc., will not increase even with the fall of their price, because consumers of these commodities will start consuming more of a superior commodity. As a result, the demand for Giffen commodity will fall. Hence Giffen goods are special category of Inferior goods whose negative income effect is greater than positive substitution effect. 1. With a rise in price the demand for ‘Giffin’ 3. Giffin goods is a: goods: (a) Low income product (b) High income product (a) increases (b) decreases (c) Both (a) and (b) (d) None of these (c) remains constant (d) becomes unstable 4. The Giffen goods are ................. Goods. (a) Inferior goods (b) Superior goods 2. For Giffin goods, price elasticity of demand (c) Related goods (d) Same goods is: (a) Negative (b) Positive (c) Zero (d) None of these

18 Economics UNIT V Money and Banking MULTIPLE CHOICE QUESTIONS Choose the correct alternative. 8. Who is the fiscal agent and adviser to government in monetary and financial 1. Narrow money refers to: matters in India? (a) M1 (b) M2 (a) SBI (b) IDBI (c) M3 (d) M4 (c) ICICI (d) RBI 2. Broad money refers to: 9. Who is the custodian of national reserves of (a) M1 (b) M2 international currency? (c) M3 (d) M4 (a) SBI (b) IDBI 3. Which one of the following institutions is (c) RBI (d) ICICI not a bank? 10. .................. is the primary function of money. (a) HDFC (b) LIC (a) Medium of Exchange (c) ICICI (d) None of these (b) Store of Value (c) Distribution of National Income 4. Quantitative instrument of RBI can be: (a) Bank Rate Policy (d) Transfer of Value 11. Number of Central bank in a country is (b) Cash Reserve Ratio (c) Statutory Liquidity Ratio .................. . (d) All of these (a) Two (b) One 5. .................... refers to that portion of total (c) Three (d) None of these deposits of a commercial bank which it has to keep with itself in the form of liquid 12. Central bank grants loan to .................. assets. (a) General Public (a) CRR (b) SLR (b) Private Companies (c) Bank Rate (d) Repo Rate (c) Commercial Banks 6. In order to control credit in the country, the (d) All of these 13. Issue of currency notes ....................... the RBI may .................. . money supply. (a) buy securities in the open market (b) sell securities in the open market (a) Increases (b) Decreases (c) reduce CRR (c) Restricts (d) Checks (d) reduce bank rate 14. Credit creation is controlled by ............ 7. Who is called the ‘bank of issue’? (a) Government (b) Central bank (a) RBI (b) SBI (c) Commercial banks (c) IDBI (d) ICICI (d) None of these 18

Money and Banking 19 15. What is the defect of the barter system? 23. With lowering margin requirements by the central bank, the borrowing capacity of the (a) Lack of double coincidence of wants borrowers: (b) Difficulty in the measurement of value (a) Rises (c) Difficulty in store of value (b) Falls (d) All of these (c) May rise or may fall 16. Which of the following is the credit money? (d) No effect (a) Cheque and draft (b) Promissory note 24. What will be the effect of an increase in the (c) Exchange note (d) All of these 17. Institution that accepts deposits for lending ‘Repo Rate on the Money Supply’? purpose is known as .......... . (a) Money supply will increase (a) Commercial Bank (b) Money supply will decrease (c) Money supply will remain the same (b) Central Bank (c) Government (d) Money supply will initially increase and then it will decrease (d) Public 18. Which of the following is the function of a 25. Reverse Repo Rate is the rate at which Central Bank: commercial bank? (a) Lends Money to Commercial Bank for (a) Accepting deposits short term (b) Credit creation (b) Lends Money to Commercial Banks for (c) Agency function long term (d) All of these (c) Accepts deposits from the commercial 19. What are the alternative measures of money Banks supply in India? (d) None of these 26. Credit Creation by commercial banks is (a) M1 (b) M2 determined by: (c) M3 and M4 (d) All of these (a) Cash Reserve Ratio (CRR) 20. Which of the following is the function of a (b) Statutory Liquidity Ratio (SLR) Central bank? (c) Initial deposits (a) Issue of notes (d) All of these (b) Banker to the Government and Banks 27. Which of the following agency is responsible (c) Supply and control of money for issuing `1 currency notes in India? (d) All of these 21. The ratio of total deposits that a commercial (a) Reserve Bank of India bank has to keep with RBI is called: (b) Ministry of Commerce (c) Ministry of finance (a) Statutory liquidity ratio (d) Niti Aayog (b) Deposit ratio 28. The Process of buying and selling of (c) Cash reserve ratio securities by the central bank of a country is (d) Legal reserve ratio known as ............ 22. Lowering of CRR by the central bank has (a) Margin Requirement the following impact on the credit creation capacity of the commercial banks: (b) Open Market Operations (c) Cash Reserve Ratio (a) Negative (d) Statutory Liquidity Ratio (b) Positive (c) Can be negative or can be positive (d) No effect

20 Economics 29. If an economy is to control recession which 31. Which of the following is a component of of the following can be appropriate? money supply? (a) Rise in Reverse Repo (a) Current Account (b) Recurring Account (b) Fall in Margin Requirement (c) Term Deposit Account (c) Rise in SLR (d) All of these (d) Selling government bonds 30. Credit money is increased when CRR: (a) Falls (b) Rises (c) Both (a) and (b) (d) None of these CASE BASED QUESTIONS Case Study 1 Read the passage/extract below carefully and answer the questions that follow. On 8 November 2016, the Government of India announced the demonetisation of all ` 500 and ` 1000 banknotes of the Mahatma Gandhi Series. It also announced the issuance of new ` 500 and ` 2000 banknotes in exchange for the demonetised banknotes. Following were various reasons for demonetisation. 1. To tackle black money in the economy. 2. To lower the cash circulation in the country which is directly related to corruption in the country. 3. To eliminate fake currency and dodgy funds which have been used by terror groups to fund terrorism in India. It has been reported that 97% of the demonetised notes are back in banks and banks have received ` 14.97 trillion as of December 30 out of the 15.4 trillion rupees that were demonetised. The return of 97% of money back in bank have a negative impact on government’s move against black money. 1. The Latest demonetization announced by (a) To curb corruption the government of India on (b) Counter feiting (a) 8th October (b) 8th November (c) To stop the use of low denomination (c) 16th August (d) 20th September notes for terrorist activities. 2. Surrendering of notes to the bank by the (d) To discourage the accumulation of Government by a specific period and “black money”. receiving new currency notes is called 4. What were the new denominations (a) digital banking (b) demonetisation introduced after the denomination in 2016? (c) Both (a) and (b) (d) None of these (a) ` 500 and ` 2000 (b) ` 500 and ` 1000 3. According to the economic survey 2016-17, (c) ` 100 and ` 500 (d) All of these which of the following was not the aim of the demonetisation? Case Study 2 Read the passage/extract below carefully and answer the questions that follow. We have adopted at present managed paper currency standard with a minimum reserve system of note issue in India. The legal money, in which the government discharges its obligations is known as standard money. India is on paper currency standard because India’s monetary authority, the Reserve Bank of India has adopted standard currency made of paper.

Money and Banking 21 Paper Currency in India is unlimited legal tender. It means that it can be used to make payments and settle debts upto an unlimited amount. Light and cheap metal coins are also used to facilitate small payments. These coins are limited legal tender, because these coins can be accepted in limited quantity. Reserve Bank of India has the sole responsibility to issue currency notes except ` 1 note and coins, which are issued by Ministry of Finance, Government of India. This authority has been granted to the government by Indian Coinage Act. The circulation of these coins is made by Reserve Bank of India. 1. Who is the central banking authority in 3. Legal tender in India includes India? (a) gold and notes (a) Reserve Bank of India (b) Central Bank of India (b) coins and banknotes (c) Ministry of Finance (d) Bankers Association of India (c) gold and coins 2. Who is responsible for the supply of coins (d) all of these in India? (a) Reserve Bank of India 4. When the cash reserve ration (CRR) is (b) Ministry of Finance increased by the RBI, it will ................ the (c) Ministry of Commerce and Industry supply of money in the economy. (d) Banker’s Association of India (a) decrease (b) increase (c) remain same (d) None of these

UNIT VII Balance of Payments MULTIPLE CHOICE QUESTIONS Choose the correct alternative. 7. Which of the following items is an intangible item in balance of payments statement? 1. Balance of payment is the statement of country’s receipts and payments in (a) Export of food grains (a) Foreign exchange (b) Import of crude oil (c) Banking services provided in other (b) Domestic currency (c) Transacting country countries (d) All of these (d) Import of steel by steel industry 2. Capital account is concerned with .......... 8. Which of the following statements deals transfer. with debts and claims of a country? (a) Capital (b) Financial (a) Balance of capital account (c) Assets (d) Liability (b) Balance of trade account (c) Balance of current account 3. The full form of IMF is (d) Balance of services (a) Indian Monetary Fund 9. Which of the following economic (b) Indian Money Fund transactions are undertaken to make (c) International Money Fund equilibrium in balance of payment? (d) International Monetary Fund (a) Autonomous items 4. Balance of payment deficit can be corrected (b) Accommodating items by (c) Invisible items (a) Import substitution (d) None of these 10. Current account of BOP records transaction (b) Export substitution (c) Increase in production is related to (d) All of these (a) exchange of goods 5. Abid Hussain Committee was established (b) exchange of services in (c) unilateral transfers (a) 1999 (b) 1974 (d) All of these (c) 1964 (d) 1984 11. Balance of trade is 6. Which of the following is the short form of (a) Difference between export and import of goods. Export Import? (b) Sum total of export and import of goods (a) EI (b) EXI (c) EXIM (d) EIM 26

Balance of Payments 27 (c) Difference between export and import 19. Gifts and grands received from abroad are of services recorded on which side of BOP account? (d) Sum total of export and import of (a) Credit side of current account services (b) Debit side of current account 12. What are the components of balance of (c) Credit side of capital account payment account? (d) Debit side of capital account (a) Current account (b) Capital account 20. Which one of the following is not recorded (c) Both (a) and (b) (d) None of these 13. Import and export of goods is called in the capital account of BOP? (a) Invisible trade (b) Visible trade (a) Equity Capital (c) Nominal trade (d) None of these 14. Import and export of services is called (b) Gifts, Remittances, and grants (c) Government aid (a) Invisible trade (b) Visible trade (c) Nominal trade (d) None of these (d) Offshore funds 15. Which of the following transactions take 21. Foreign Exchange Transactions which are place on both current and capital account? independent of other transactions in the Balance of Payments Account are called: (a) Current transactions (a) Autonomous (b) Accommodating (b) Capital transactions (c) Compensatory (d) None of these (c) Autonomous transactions 16. Which of the following transactions take (d) Accommodating transactions place only on capital account? 22. What is the relationship between demand (a) Autonomous (b) Accomodating for foreign exchange and exchange rate? (c) Compensatory (d) None of these 17. Balance of payment accounting uses which (a) Inverse (b) Direct standard of accounting? (c) One to one (d) No to relationship (a) Double entry system 23. The exchange rate at which demand for (b) Single entry system foreign currency becomes equal to its (c) Accrual basis system supply called (d) Cash basis system 18. Which of the following is not a component (a) Equal rate of exchange of BOP? (b) Unequal rate of exchange (c) Equilibrium rate (a) Current account (b) Capital account (c) Real account (d) None of these (d) All of these CASE BASED QUESTIONS Case Study 1 Read the passage/extract below carefully and answer the questions that follow. Balance of payments (BOP) is balance of trade plus various other receipts and payments on different accounts from abroad. In addition to imports and exports it takes into consideration the amount receivable or payable as regards cargo freight charges, port charges, expenditure on account of foreign visits for tours, education, medical treatment, business etc., purchase of fuel for ships and provision for crews, maintenance of embassies abroad, remittance of foreign nationals, foreign loans and the repayment of interest thereon, remittance of profit of foreign enterprises and development grants etc. The balance of payments has a great impact on the movements of exchange rates and international trade. When a country is faced with trade deficits, it is likely to experience a fall in its reserves and a

28 Economics depreciation of its currency. As a result decision made by consumers, firms and government affect the balance of payments. The Reserve Bank of India (RBI) is responsible for compilation and dissemination of BOP data while Ministry of Commerce is the nodal agency for the formulation of policies for increasing the export of the country in various commodities. 1. In India which authority takes the purview 3. A balance of payments surplus means the of import and export? country exports (a) EXIM (a) More than its import (b) RBI (b) Less than its import (c) Ministry of Finance (c) Equal to its import (d) Ministry of Commerce (d) None of these 2. ................... is the complete statement of the 4. Favourable Balance of payments equal to (a) Exports > Imports country’s receipts and payments in foreign (b) Exports < Imports exchange. (c) Exports = Imports (a) Balance of trade (d) None of these (b) Balance of payment (c) Balance of current account (d) Balance of capital account Case Study 2 Read the passage/extract below carefully and answer the questions that follow. Every economy, these days is dependent economy. It has to import and export goods, lend and borrow, organise tours, sports, pilgrimage, exhibitions and delegations, establish embassies and high commissions. All these activities require receipts and payment of money. International transactions require foreign currencies to settle deals. Finally, at the end of the accounting year, we prepare an account showing overall receipts and payment and balance the account. We are also required to calculate the balance of trade in order to determine our economic status. In order to calculate the balance of trade, we will have to match and differentiate between our exports and imports. 1. The difference between total imports and 3. Which of the following is not a component total exports of visible material goods is of balance of payments? known as (a) Financial capital transfer (a) Balance of payment (b) Export and import of goods and services (b) Balance of trade (c) External loan and investment (c) Disequilibrium (d) None of these (d) Trade deficit 4. Favourable balance of trade equal to 2. Which of the following does not form (a) Exports of goods < Imports of goods (b) Exports of goods > Imports of goods part of current account under balance of (c) Exports of goods = Imports of goods payments? (d) None of these (a) Export and import of goods (b) Export and import of services (c) Income receipts and payments (d) Capital receipts and payments

Current Challenges Facing Indian Economy 33 UNIT IX Current Challenges Facing Indian Economy MULTIPLE CHOICE QUESTIONS Choose the correct alternative. 7. In 1992-2000, Poverty line was defined as (a) Consumption worth ` 328 per person 1. What was the percentage of the population below the poverty line in India in 2011-12? per month for rural areas (b) Consumption worth ` 454 per person (a) 19.3% (b) 26.1% per month for urban areas (c) 32% (d) 22% (c) Both (a) and (b) (d) None of these 2. MPCE stands for —­ 8. Which of the following is a type of poverty? (a) Maximum Per Capital Expenditure (a) Simple poverty (b) Relative poverty (c) Complex poverty (d) Pseudo poverty (b) Minimum Per Capita Expenditure 9. Which kind of poverty is ascertained with (c) Monthly Per Capital Expenditure the help of poverty line? (d) None of these (a) Relative poverty (b) Simple poverty (c) Complex poverty (d) Absolute poverty 3. Which one of the following are categorized 10. Relative poverty is calculated with the help as always poor? of (a) Chronic poor (b) Transient poor (a) Lorenz curve (b) Ginni curve (c) Churning poor (d) None of these (c) Gantt curve (d) Parker curve 11. The self-employed people are which kind of 4. Transient poor includes poor? (a) Churning poor (a) Chronic poor (b) Transient poor (b) Occasionally poor (c) Never poor (d) Pseudo poor 12. Which of the following increases price of (c) Both (a) and (b) the commodity? (d) None of these (a) Capital deficiency 5. Poverty is a (b) Inflation (c) Unemployment (a) Social phenomenon (d) Social factors 13. MNP stands for (b) Economical phenomenon (a) Marginal Needs Programme (c) Socio-economic phenomenon (b) Maximum Needs Programme (d) Scientific phenomenon 6. Poverty line is drawn on the basis of (a) Per capita expenditure (b) Per capita earning (c) Per capita saving (d) None of these 33

34 Economics (c) Minimum Needs Postulates 20. Secondary level education is for which age group? (d) Minimum Needs Programme 14. Which of the following statements is (a) 12-18 (b) 13-15 correct? (c) 18-21 (d) 15-18 (a) IRDP programme was incorporated in 21. Which of the following are indicators of the VI five year plan Human Development Index? (b) High level of technology is responsible (a) Longevity for the poverty of India (b) Educational attainment (c) Landless labours are the transient poor (c) Real GDP per capita (d) People below the poverty line are (d) All of these transient poor 22. Human capital can be increased by incurring 15. Which of the following is/are source/s of expenditure on human capital formation? (a) Improvement in technology (a) Investment in education (b) Increase in GDP (b) On-the-job training (c) Improvement of health (c) Health (d) None of these (d) All of these 23. Which of the following is not a role of human capital formation in economic growth? 16. Which of the following institutes administer the education? (a) Increases production (a) NCERT (b) UGC (b) Increases quality of life (c) AICTE (d) All of these (c) Increases longevity 17. Which of the following is not an indicator of (d) None of these education level? 24. Economic activities require (a) Operation blackboard (a) Human factors (b) Physical factors (b) Gross enrolment ratio (c) Both (a) and (b) (d) None of these (c) Adult literacy rate 25. Sound human capital needs (d) None of these (a) Sound health 18. The main objective of operation blackboard (b) Excellent education is to equip every primary school or section with (c) Professional skills (d) All of these (a) Two reasonably large all weather rooms 26. Education enhances .......... of the people. (b) Two teachers, one of them a woman (a) Productivity (b) Skills (c) Separate toilets for boys and girls (c) Income (d) All of these (d) All of these 27. Social structure is based upon 19. AICTE stands for (a) Education of the people (a) All India Commission for Technical (b) Health of the population Education (c) Both (a) and (b) (b) All India Council for Technology (d) None of these Education 28. .......... is better indicator of development (c) All India Council for Technical Education (a) National income (d) All India Commission for Technology (b) Per capita income Education (c) Real Per capita income (d) National production

Current Challenges Facing Indian Economy 35 29. Rural India is real India, where about .......... (c) Kudumbashree of the population resides. (d) None of these (a) 60% (b) 65% 37. Which source of credit promote thrift by minimum contribution from each member (c) 70% (d) None of these and credit is sanctioned to needy members to be repayable in small instalments at 30. Rural development is the concept which reasonable rate of interest? focuses on development of (a) Backward and village areas (a) Regional Rural Banks (b) Urban areas (b) Commercial Banks (c) Poor areas of the country (c) Self-help Groups (d) None of these (d) None of these 31. Which among the following activities is/are 38. Which of the following is a process that taken for the development of rural India? involves functions of assembling, storage, processing, packaging, transportation, (a) Land reforms grading and distribution of agricultural commodities throughout the country? (b) Poverty alleviation programmes (c) Productive resource development of the (a) Agricultural management locality (b) Agricultural banking (d) All of these (c) Agricultural diversification 32. Agriculture, these days requires funds for improved quality of (d) Agricultural marketing (a) Seeds (b) Cattle 39. Which of the following is/are benefit(s) of regulated markets? (c) Harvesters (d) All of these (a) It ensures standardisation of weights 33. Government grants loans to farmers in and measures emergencies like flood, drought or other natural calamities. These loans are known (b) In case of disputes, it also arranges for as arbitration (a) TACCAVI loans (b) Secured loans (c) It tries to bring maximum discipline in the marketing of farm produce (c) Unsecured loans (d) None of these (d) All of these 34. When was the National Bank forAgricultural 40. Which of the following commodities are and Rural Development set up? required for voluntary grading under “AGMARK”? (a) 1962 (b) 1972 (c) 1982 (d) 1992 (a) Vegetable oil (b) Spices 35. Which of the following is source of (c) Butter (d) All of these agricultural finance? 41. Which of the following is/are not the defects (a) Money lenders of agricultural marketing in India? (b) Commercial bank (a) Lack of infrastructure (c) Regional Rural Banks (b) Lack of storage facilities (d) All of these (c) Existence of middlemen 36. Which of the following is women-oriented (d) All of these community-based poverty reduction programme being implemented in Kerala? 42. During the period between 1991-2003 planned efforts were made to grow (a) Agricultural credit cooperative societies horticulture. (b) Self help groups (SHGs) (a) Green revolution (b) Golden revolution

36 Economics (c) Golden Fiber revolution 52. During first plan unemployment was estimated to be (d) Silver revolution 43. 14 major commercial banks were (a) 33 lakhs (b) 57 lakhs nationalised in (c) 71 lakhs (d) None of these (a) 1969 (b) 1980 53. LPG and LNG are example of (c) 1975 (d) 1991 (a) Solar energy (b) Bio-energy 44. Agricultural diversification includes (c) Wind energy (d) Natural gas (a) Diversification of crop production 54. Energy generated by Sun is known as (b) Shifting of workforce to allied activities (a) Solar energy (b) Bio-energy (c) Employing people in non-farm activities (c) Wind energy (d) Electricity (d) All of these 55. Which of the following is a non-conventional source of energy? 45. .......... is part of animal husbandry (a) Dairy farming (b) Cattle breeding (a) Thermal power (b) Hydroelectricity (c) Poultry (d) All of these (c) Atomic power (d) Solar energy 46. Surplus population engaged in agriculture 56. Which primary source of energy has can be gainfully employed in the largest share in commercial energy consumption? (a) Animal husbandry (a) Natural gas (b) Hydro energy (b) Fisheries (c) Coal (d) Oil (c) Horticulture 57. From which of the following sources of (d) All of these generation, we get the largest amount of power? 47. .......... is/are allied agricultural activities (a) Agro processing (b) Food processing (a) Atomic power (c) Tourism (d) All of these (b) Thermal power 48. Rural development will bring (c) Hydro-electric power (a) Employment opportunities (d) Tidal power (b) Raise standard of living 58. Which of the following power is electricity generated from radioactive elements? (c) Prosperity (d) All of these (a) Atomic power 49. Most of the disguised unemployed persons (b) Thermal power in India are found in (c) Hydro-electric Power (a) Industry (b) Agriculture (d) All of these (c) Trade (d) Transport 59. ISM stands for 50. Jawahar Gram Samridhi Yojna was launched (a) Indian System of Mediclaim in (b) Indian System of Medical (a) 1979 (b) 1989 (c) Indian System of Medicine (c) 1999 (d) None of these (d) None of these 51. Which state has the lowest per capita income in India? 60. Which of the following system is not included in the Indian System of Medicines? (a) West Bengal (b) Bihar (a) Ayurveda (b) Allopathy (c) Madhya Pradesh (d) Uttar Pradesh (c) Homeopathy (d) Naturopathy

Current Challenges Facing Indian Economy 37 61. When was the Central Pollution Control 63. World Environment day is observed on Board (CPCB) set up? (a) 5 September (b) 1 January (a) 1984 (b) 1994 (c) 5 June (d) 15 August (c) 1964 (d) 1974 64. Which of the following is an impact of global warming? 62. How many industrial categories have been identified as significantly polluting by (a) Rise in sea level CPCB? (b) Deforestation (a) 27 (b) 25 (c) Waste generation (c) 17 (d) 31 (d) Rapid increase in population CASE BASED QUESTIONS Case Study 1 Read the passage/extract below carefully and answer the questions that follow. Trends in Employment Pattern, 1972–2000 Status Sector Year Self- Regular Casual Primary Secondary Service Employment Salaried Wage Sector Sector Sector 1972–73 Employees Labourers 1983–84 14.8 1993–94 61.4 15.4 23.2 74.3 10.9 16.9 1999–2000 20.1 57.3 13.8 28.9 68.6 11.5 23.8 54.6 13.6 31.8 64.0 16.0 52.6 14.6 32.8 60.4 15.8 It may be observed from above table that the percentage of self-employed has declined from 61% to 53%. It shows that the employment is shifting to regular and casual workers. The number of regular salaried employees seems almost the same though it is varying between 13.6% to 15.4%. There has been considerable increase in the percentage of casual wage labourers which has increased from 23% in 1972–73 to 33% in 1999–2000. The table also shows that employment in the primary sector is still the highest, though it has decline from 74% to 60%. There has been considerable increase in the secondary sector employment increasing from 11% to 16%. Jobs in the service sectors have also increased from 15% to 24%. Shifting of employment status from primary to secondary and tertiary sector shows our progressive economic development. 1. Which of the following statement is not true 2. Which of the following is the correct for a worker? definition of self-employed? (a) A worker contributes to the GDP. (a) Not able to find jobs during some (b) Workers may temporarily abstain from months of the year. work due to illness. (b) Own and operate their own enterprises (c) Self-Employed are not workers. (d) Those who help the main workers are (c) Recent wages on a regular basis by the employer also workers. (d) Casually engaged in other individuals enterprises

38 Economics 3. What percent of urban workers are casual (c) Cashier in State Bank of India labourers? (d) Vegetable Vendor 5. Which of the following is a primary sector (a) 54 per cent (b) 41 per cent activities? (c) 39 per cent (d) 18 per cent (a) Mining and Quarrying (b) Construction 4. Which of the following workers is a regular (c) Trade salaried employee? (d) Transport and Storage (a) Owner of a saloon (b) Rickshaw Puller Case Study 2 Read the passage/extract below carefully and answer the questions that follow. Our 50 years’ experience of planned development shows that with the development of economy employment opportunities grow. Expansion of productive activities increases employment situations. The following diagram shows that there is positive relationship between growth rate of GDP and employment opportunities. Growth of Employment and Gross Domestic Product, 1951-2005 7 Annual Average Growth Rate 6 5.7 5.8 6.1 6.1 5 4.8 4 4.2 3.9 3.6 3.3 3.4 3 2.8 2.89 2.1 1.99 2 2.03 1.84 1.73 1.89 1.5 0.98 0.85 1 0.39 0 1951-56 1956-61 1961-66 1967-69 1969-74 1974-79 1980-85 1985-90 1990-912997-20109099-2005 GDP Employment 1. Which was the average rate of growth of 4. If increase in GDP is mainly employment during 1950–2010? (a) due to increased production of (a) 1 per cent (b) 2 per cent equipment (c) 5 per cent (d) 10 per cent (b) ammunitions (c) then increase cannot improve welfare of 2. In which year GDP was 6.1? economy (a) 1980–85 (b) 1990–94 (d) All of these (c) 1990–92 (d) 1997–2000 3. In which year, rate of growth of employment was 2.89? (a) 1985–90 (b) 1990–92 (c) 1997–2000 (d) 1999–2005

Current Challenges Facing Indian Economy 39 Case Study 3 Read the passage/extract below carefully and answer the questions that follow. Indicators of Health in India in Comparison with Other Countries Indicator India China USA Sri Lanka 2 8 Infant Mortality Rate/ 1,000 live births 68 30 8 15 99 97 Under-5 mortality/1,000 live births 87 37 93 99 3.7 Birth by skilled attendants 43 97 14.6 44.9 48.7 Fully immunized 67 84 23.1 6 Health expenditure as % of GDP 4.8 5.8 5,274 131 Government share of total expenditure (%) 21.3 33.7 Government health spending to total 4.4 10 government spending (%) Per capita spending in international dollars 96 261 The above table shows that in spite of our satisfactory progress in the health status of our country, we are lagging behind countries like China, USA and Sri Lanka. Our mortality rate is the highest. The number of skilled birth attendents and Government spending on health are the lowest. The Government must make more provisions of funds for health infrastructure. 1. Health is a holistic process related to (b) Government hospitals do not provide sufficient facilities. (a) the overall growth (c) Don’t have access to any specialised (b) development of the nation care for people in the rural areas. (c) Both (a) & (b) (d) All of these 4. Why are foreigners flocking to India? (d) None of these (a) Our qualified professionals 2. Which of the following countries invest (b) Latest medical technologies almost 50% of its GDP in infrastructure? (c) Our medical treatment costs very less (a) India (b) China comparative to their own countries (d) All of these (c) Pakistan (d) Sri Lanka 3. Main drawbacks of our health care system are: (a) No sufficient Public Health system and facilities for bulk of the population. Case Study 4 Read the passage/extract below carefully and answer the questions that follow. The Government has the constitutional obligation to guide and regulate the health related issues, such as medical education, adulteration of food, drugs and poisons, medical profession, vital statistics, lunacy and mental deficiency etc. In order to fulfill our commitment we have built sound health infrastructure. Our health infrastructure is made up of three-tier system Primary, Secondary and Tertiary. There has been a very considerable progress in health development in the sense of avoidance of diseases since 1950–51. The death rate declined from 27.4 during 1941–51 to 9 per thousand. The infant

40 Economics mortality rate had declined from 183 in 1951 to 96. The life expectancy had gone up from 32.45 years in 1951 to 52.6 years in 1981 for males and from 31.66 years in 1951 to 51.6 years in 1981 for females. Life expectancy has increased to 63 years at present. Some communicable diseases like cholera and small pox are totally eradicated. 1. When was India declared free from small- 4. Which of the following is not a function of pox? primary healthcare? (a) 1975 (b) 1976 (a) Spreading education concerning prevailing health problems. (c) 1977 (d) 1978 (b) Conducting research 2. Which types of communal diseases account (c) Promoting food supply and proper for more than half of GBD in India? nutrition (a) Diarrhoea (b) Malaria (d) Providing essential drugs. (c) Tuberculosis (d) All of these 3. Our health infrastructure is composed of three-tier such as (a) Primary (b) Secondary (c) Tertiary (d) All of these Case Study 5 Read the passage/extract below carefully and answer the questions that follow. Global warming is a gradual increase in the average temperature of the earth’s lower atmosphere as a result of the increase in greenhouse gases since the Industrial Revolution. Much of the recent observed and projected global warming is human-induced. It is caused by man-made increases in carbon dioxide and other greenhouse gases through the burning of fossil fuels and deforestation. Adding carbon dioxide, methane and such other gases (that have the potential to absorb heat) to the atmosphere with no other changes will make our planet’s surface warmer. The atmosphere concentrations of carbon dioxide and CH4 have increased by 31 per cent and 149 per cent, respectively above pre-industrial levels since 1750. During the past century, the atmospheric temperature has risen by 1.1°F (0.6°C) and sea level has risen several inches. Some of the longer-term results of global warming are melting of polar ice with a resulting rise in sea level and coastal flooding; disruption of drinking water supplies dependent on snow melts; extinction of species as ecological niches disappear; more frequent tropical storms; and an increased incidence of tropical diseases. Among factors that may be contributing to global warming are the burning of coal and petroleum products (sources of carbon dioxide, methane, nitrous oxide, ozone); deforestation, which increases the amount of carbon dioxide in the atmosphere; methane gas released in animal waste; and increased cattle production, which contributes to deforestation, methane production, and use of fossile fuels. A UN Conference on Climate Change, held in Kyoto, Japan, in 1997, resulted in an international agreement to fight global warming which called for reductions in emissions of greenhouse gases by industrialised nations. 1. Which of the following is an impact of 2. The global emissions (by weight) of global warming? following pollutants from natural resources are maximum in case of (a) Deforestation (b) Rise in sea level (a) Nitric oxide (b) Carbon monoxide (c) Waste generation (d) Rapid increase in population (c) Methane (d) Carbon dioxide

Current Challenges Facing Indian Economy 41 3. Greenhouse gases are: 5. Which one of the following is incorrect about the Greenhouse effect? (a) Water vapour (b) Carbon dioxide (a) Life on the earth is possible due to (c) Methane (d) All of these greenhouse effect. 4. How humans making greenhouse gases of (b) Greenhouse effect is a natural process our own? that maintains earth temperature. (a) Burning fossils in our cars (c) More of the emission of greenhouse gases, more is the temperature of the (b) Burning forests earth’s atmosphere (c) With large-scale agriculture (d) Increased emission is greenhouse gases is natural process. (d) All of these Case Study 6 Read the passage/extract below carefully and answer the questions that follow. You may be aware of the Chipko Movement, which aimed at protecting forests in the Himalayas. In Karnataka, a similar movement took a different name, ‘Appiko’, which means to hug. On 8 September 1983, when the felling of trees was started in Salkani forest in Sirsi district, 160 men, women and children hugged the trees and forced the woodcutters to leave. They kept vigil in the forest over the next six weeks. Only after the forest officials assured the volunteers that the trees will be cut scientifically and in accordance with the working plan of the district, did they leave the trees. When commercial felling by contractors damaged a large number of natural forests, the idea of hugging the trees gave the people hope and confidence that they can protect the forests. On that particular incident, with the felling discontinued, the people saved 12,000 trees. Within months, this movement spread to many adjoining districts. Indiscriminate felling of trees for fuelwood and for industrial use had led to many environmental problems. Twelve years after setting up of a paper mill in Uttar Kanara area, bamboo has been wiped out from that area. “Broad-leaved trees which protected the soil from the direct onslaught of rain have been removed, the soil washed away, and bar laterite soil left behind. Now nothing grows but a weed”, says a farmer. Farmers also complain that rivers and rivulets dry up quicker, and that rainfall is becoming erratic. Diseases and insects earlier unknown are now attacking the crops. Appiko volunteers want the contractors and forest officials to follow certain rules and restrictions. For instance, local people should be consulted when trees are marked for felling and trees within 100 metres of a water source and on a slope of 30 degrees or above should not be felled. Do you know that the government allocates forestlands to industries to use forest materials as industrial raw material? Even if a paper mill employs 10,000 workers and a plywood factory employs 800 people but if they deprive the daily needs of a million people, is it acceptable? What do you think? 1. Chipko Andolan is concerned with 2. The Chipko movement started from: (a) Rani in Garhwal (Uttarakhand) (a) Conservation of natural resources (b) Arborio forest (b) Development of new breeds of forest (c) Khejrali village (d) None of these plants (c) Zoological Survey of India (d) Forest conservation

42 Economics 3. When we consider the conservation of (a) To prevent child marriage forests, we need to look at the (b) To fight against discrimination (c) To prevent trees from being cut and fell (a) People who are humanists and (d) To discontinue child labour conscious about human rights 5. On what issue the villagers related to (b) Industrialist who use the various forests Chipko movement protested? produce (a) Deforestation and commercial logging (c) The people who live in or around forests (b) Construction of big dams (c) Untouchability (d) The forest department of Government, (d) Exploitation of adivasis the industrialists and the people who live in or around forests 4. What was the main demand of Chipko movement?

Answers Unit I: Introductory to Microeconomics 1. (a) 2. (d) 3. (c) 4. (b) 5. (d) 6. (a) 7. (b) 8. (b) 9. (b) 10. (b) 11. (a) 12. (a) 13. (b) 14. (c) 15. (d) 16. (c) 17. (d) 18. (c) 19. (b) 20. (d) 21. (a) 22. (d) 23. (d) 24. (a) 25. (d) 26. (b) 27. (a) 28. (c) 29. (d) Case Study – 1 1. (a) 2. (a) 3. (d) 4. (a) Case Study – 2 1. (a) 2. (b) 3. (c) 4. (d) Unit II: Consumer Behaviour and Demand 1. (a) 2. (a) 3. (d) 4. (c) 5. (a) 6. (c) 7. (a) 8. (b) 9. (a) 10. (a) 11. (b) 12. (c) 13. (b) 14. (d) 15. (d) 16. (a) 17. (a) 18. (b) 19. (c) 20. (a) 21. (a) 22. (a) 23. (a) 24. (d) 25. (c) 26. (d) 27. (a) 28. (a) 29. (c) 30. (d) 31. (a) 32. (a) 33. (a) Case Study – 1 1. (a) 2. (b) 3. (b) 4. (a) Case Study – 2 1. (a) 2. (b) 3. (a) 4. (a) Unit III: National Income and Related Aggregates 1. (d) 2. (c) 3. (b) 4. (d) 5. (b) 6. (b) 7. (c) 8. (b) 9. (c) 10. (a) 11. (b) 12. (b) 13. (a) 14. (d) 15. (b) 16. (b) 17. (d) 18. (a) 19. (b) 20. (c) 21. (a) 22. (b) 23. (a) 24. (b) 25. (c) 26. (b) 27. (d) 28. (a) 29. (b) 30. (d) 31. (c) 32. (d) 33. (d) 34. (b) 35. (c) 36. (b) 37. (c) 38. (c) Case Study – 1 1. (a) 2. (b) 3. (c) 4. (c) 5. (c) Case Study – 2 1. (b) 2. (b) 3. (a) 4. (c) 5. (d) Unit IV: Determination of Income and Employment 1. (c) 2. (d) 3. (d) 4. (b) 5. (b) 6. (a) 7. (b) 8. (a) 9. (b) 10. (c) 11. (c) 12. (a) 13. (c) 14. (a) 15. (b) 16. (c) 17. (c) 18. (a) 19. (b) 20. (c) 21. (a) 22. (b) 23. (a) 24. (a) 25. (d) 26. (c) 27. (d) 28. (c) 29. (b) 30. (d) 31. (c) 32. (c) Case Study – 1 1. (b) 2. (d) 3. (d) 4. (d) Case Study – 2 1. (d) 2. (d) 3. (a) 4. (c) 5. (a) 46

Answers 47 Unit V: Money and Banking 1. (a) 2. (c) 3. (b) 4. (d) 5. (b) 6. (b) 7. (a) 8. (d) 9. (c) 10. (a) 11. (b) 12. (c) 13. (a) 14. (b) 15. (d) 16. (d) 17. (a) 18. (d) 19. (d) 20. (d) 21. (c) 22. (b) 23. (a) 24. (b) 25. (c) 26. (d) 27. (c) 28. (b) 29. (b) 30. (a) 31. (a) Case Study – 1 1. (b) 2. (b) 3. (c) 4. (a) Case Study – 2 1. (a) 2. (b) 3. (b) 4. (a) Unit VI: Government Budget and the Economy 1. (a) 2. (b) 3. (d) 4. (a) 5. (b) 6. (a) 7. (c) 8. (a) 9. (c) 10. (c) 11. (a) 12. (b) 13. (a) 14. (c) 15. (a) 16. (a) 17. (a) 18. (c) 19. (a) 20. (a) 21. (d) 22. (b) 23. (c) 24. (d) 25. (a) 26. (c) 27. (b) 28. (b) 29. (a) 30. (a) 31. (d) 32. (a) Case Study – 1 3. (a) 4. (b) 1. (a) 2. (c) Case Study – 2 3. (c) 4. (a) 1. (a) 2. (b) Unit VII: Balance of Payments 1. (a) 2. (b) 3. (d) 4. (d) 5. (d) 6. (c) 7. (c) 8. (a) 9. (b) 10. (d) 11. (a) 12. (c) 13. (b) 14. (a) 15. (a) 16. (b) 17. (a) 18. (c) 19. (a) 20. (b) 21. (c) 22. (a) 23. (c) Case Study – 1 1. (d) 2. (b) 3. (a) 4. (a) Case Study – 2 1. (b) 2. (d) 3. (d) 4. (b) Unit VIII: Development Experience (1947-90) and Economic Reforms Since 1991 1. (d) 2. (a) 3. (d) 4. (c) 5. (b) 6. (a) 7. (b) 8. (b) 9. (d) 10. (b) 11. (d) 12. (d) 13. (d) 14. (c) 15. (b) 16. (d) 17. (d) 18. (a) 19. (c) 20. (b) 21. (d) 22. (a) 23. (b) 24. (c) 25. (c) 26. (a) 27. (b) 28. (c) 29. (d) 30. (a) 31. (d) 32. (d) 33. (c) 34. (c) 35. (a) 36. (a) 37. (b) 38. (c) 39. (d) 40. (a) 41. (a) 42. (c) Case Study – 1 1. (a) 2. (b) 3. (b) 4. (a) 5. (c) Case Study – 2 1. (a) 2. (b) 3. (c) 4. (a) 5. (d)

48 Economics Unit IX: Current Challenges Facing Indian Economy 1. (d) 2. (c) 3. (a) 4. (c) 5. (c) 6. (a) 7. (c) 8. (b) 9. (d) 10. (a) 11. (c) 12. (b) 13. (d) 14. (a) 15. (d) 16. (d) 17. (d) 18. (d) 19. (c) 20. (a) 21. (d) 22. (c) 23. (d) 24. (c) 25. (d) 26. (d) 27. (c) 28. (c) 29. (c) 30. (a) 31. (d) 32. (d) 33. (a) 34. (c) 35. (d) 36. (c) 37. (c) 38. (d) 39. (d) 40. (d) 41. (d) 42. (b) 43. (a) 44. (d) 45 (d) 46. (d) 47. (d) 48. (d) 49. (b) 50 (c) 51. (b) 52. (a) 53. (d) 54. (a) 55 (d) 56. (c) 57. (b) 58. (a) 59. (c) 60. (b) 61. (d) 62. (c) 63. (c) 64. (a) Case Study – 1 1. (c) 2. (b) 3. (d) 4. (c) 5. (a) Case Study – 2 1. (b) 2. (c) 3. (c) 4. (d) Case Study – 3 1. (c) 2. (b) 3. (d) 4. (d) Case Study – 4 1. (c) 2. (d) 3. (d) 4. (b) Case Study – 5 1. (b) 2. (d) 3. (d) 4. (d) 5. (d) Case Study – 6 1. (a) 2. (a) 3. (d) 4. (c) 5. (a) Unit X: Developing Experiences of India 1. (b) 2. (c) 3. (c) 4. (b) 5. (a) 6. (b) 7. (b) 8. (c) 9. (c) 10. (d) 11. (a) 12. (b) 13. (c) 14. (a) 15. (b) 16. (d) 17. (b) 18. (c) 19. (c) 20. (a) 21. (c) 22. (b) 23. (a) 24. (d) 25. (c) 26. (b) 27. (c) 28. (b) 29. (d) Case Study – 1 1. (c) 2. (c) 3. (b) 4. (a)

Mock Test Paper –1 M-1 Mock Test Paper –1 1. Theory of demand is a concept of 8. What was the life expectancy at birth in (a) Microeconomics (b) Macroeconomics India on the eve of Independence? (c) Both (a) and (b) (d) None of these (a) 60 years (b) 50 years 2. Which of the following is a characteristic of (c) 44 years (d) All of these utility? 9. Which one of the following are categorized (a) Utility is a psychological phenomenon as always poor? (b) Utility is subjective (a) Chronic poor (b) Transient poor (c) Utility is a relative concept (c) Churning poor (d) None of these (d) All of these 10. Which of the three countries has the highest growth rate of GDP? 3. Macro word is derived from Makros, which is the word of .......... language. (a) China (b) India (a) French (b) Latin (c) Pakistan (d) All equal (c) Greek (d) None of these 11. Selection of production technique is a problem of 4. A general theory of employment, interest and money was presented by ............... (a) What to produce (a) Adam Smith (b) Marshall (b) How to produce (c) For whom to produce (c) Robbins (d) Keynes (d) None of these 5. Quantitative instrument of RBI can be: (a) Bank Rate Policy 12. The ability of satisfying human want in a goods is called its: (b) Cash Reserve Ratio (c) Statutory Liquidity Ratio (a) Productivity (b) Satisfaction (d) All of these (c) Utility (d) Profitability 6. Which of the following is a direct tax? 13. ‘The General Theory of Employment, (a) Personal income tax Interest and Money’ was written by: (b) Excise duty (a) Marshall (b) Ragnar (c) Sales tax (c) Keynes (d) Ricardo (d) Service tax 7. Balance of payment is the statement of 14. Fiscal policy is also called ............... country’s receipts and payments in (a) Monetary policy (b) Budgetary policy (c) Economic policy (d) None of these (a) Foreign exchange 15. Who is called the ‘bank of issue’? (b) Domestic currency (a) RBI (b) SBI (c) Transacting country (c) IDBI (d) ICICI (d) All of these M-1

M-2 Economics 16. The difference between total receipts and 24. The value of multiplier is: total expenditure is 1 1 (a) Fiscal deficit (b) Budget deficit (a) MPC (b) MPS (c) Revenue deficit (d) Capital deficit 17. The full form of IMF is (c) 1 (d) 1 1 – MPS MPC – 1 (a) Indian Monetary Fund (b) Indian Money Fund 25. Which of the following is the function of a (c) International Money Fund commercial bank? (d) International Monetary Fund (a) Accepting deposits 18. What was the growth rate of per capita (b) Credit creation income in India on the eve of Independence? (c) Agency function (a) 0.9% (b) 0.5% (d) All of these 26. Which of the following is the revenue (c) 1.2% (d) 3% expenditure of the government? 19. Poverty line is drawn on the basis of (a) Per capita expenditure (a) Payment of interest (b) Per capita earning (b) Purchase of building (c) Purchase of machinery (c) Per capita saving (d) None of these (d) Loans granted to a state government. 27. Which of the following economic 20. Growth rate of population is highest in which of the following country? transactions are undertaken to make equilibrium in balance of payment? (a) India (b) China (a) Autonomous items (c) Pakistan (d) None of these (b) Accommodating items 21. Rightward shift of production possibility (c) Invisible items curve means (a) Under utilisation of resources (d) None of these 28. Farming in which crops are produced to (b) Economic growth provide for the basic needs of the family is (c) Production of capital goods only called: (d) Production of consumer goods only (a) Stagnant Agriculture 22. Increase in the demand for wages due to (b) Subsistence Agriculture industrial development is an example of: (a) Income demand (c) Commercial Agriculture (b) Cross demand (d) None of these (c) Derive demand 29. China moving ahead of India and Pakistan is true for which indicator? (d) Competitive demand (a) HDI ranking 23. Capital stock is equal to: (b) GDP per capita (a) Capital stock produced during the year (c) Proportion of population below poverty (b) Capital stock produced during the line previous year (d) All of these (c) Opening balance of capital stock + Increase in capital stock during the 30. Who was the father of economics, defined year economic as ‘Science of wealth’? (d) Capital stock likely to be produced next (a) Adam Smith (b) K.E Boulding year (c) Watson (d) None of these

Mock Test Paper –1 M-3 31. Which of the following is a formula for (c) Socialist Economy measuring the elasticity of demand? (d) None of these Proportionate Change in Demand (a) Proportionate Change in Price 39. To which factor, economic problem is basically related to: Proportionate Change in Price (a) Choice Proportionate Change in Demand (b) (b) Firm Selection Change in Demand (c) Consumer’s Selection Change in Price (c) (d) None of these (d) None of these 40. Indirect taxes are not included in the national income because: 32. Consumption of fixed capital is also known as: (a) It is not a factor income (a) Capital formation (b) It is an income of lesser value (c) It affects the price of goods (b) Depreciation (c) Investment (d) It is an income for the government 41. The ratio of total deposits that a commercial (d) All of these 33. Deflationary Gap shows the measurement bank has to keep with RBI is called: of: (a) Statutory liquidity ratio (a) Deficit Demand (b) Deposit ratio (c) Cash reserve ratio (b) Surplus Demand (c) Full Employment (d) Legal reserve ratio 42. When was the National Bank forAgricultural (d) None of these and Rural Development set up? 34. Goods and Service Tax (GST) is an example (a) 1962 (b) 1972 of ...................... under government receipts (c) 1982 (d) 1992 (a) Indirect tax (b) Direct tax Read the passage/extract below carefully and answer the questions that follow. (c) Non-tax revenue (d) Income tax 35. Which of the following transactions take Scarcity concept explains the presence of economic problems. It is concerned with the positive aspect of place on both current and capital account? the subject. Modern economists feel that economist should also suggest, how the scarce means should (a) Autonomous (b) Accommodating be further increased to satisfy more wants and attain (c) Compensatory (d) None of these goods standard of living. The propounder of this 36. Excess of exports over imports shows what concept is Professor Samuelson, who presented the growth-oriented definition of Economics. kind of balance of trade? According to him, “Economics is the study of how man and society choose, with or without the use of money to (a) Favourable (b) Unfavourable employ scarce productive resources, which could have alternative uses, to produce various commodities over (c) Balanced (d) None of these time and distribute them for consumption now and in the future among various people and groups of society”. 37. Which of the following are indicators of The important features of this concept may be Human Development Index? summarised as under: (a) Longevity (b) Educational attainment (c) Real GDP per capita (d) All of these 38. Which type of economic system is followed • Problem of choice making arises due to in China? unlimited wants and scarce means. We have (a) Mixed Economy (b) Capitalist Economy

M-4 Economics to decide which wants are to be satisfied Read the passage/extract below carefully and and which of them are to be deferred. answer the questions that follow. • Wants have tendency to increase in the Equilibrium means position of rest or position of modern dynamic economic system, so the no change. It can be defined as a balance between available resources should be judiciously two or more variables at same level. Consumer’s used. Best possible efforts should also be equilibrium is the point or situation in which the made to increase the resources, so that consumer gets maximum amount of utility or increasing wants can be satisfied. satisfaction. Utility means power of any commodity to satisfy a human want. Since at equilibrium • Economics is not concerned with the consumer’s satisfaction is maximised therefore he identification of economic problems but feels no urge to change. He is satisfied with the it should also suggest ways and means utility derived from the consumption of goods to solve the problems of unemployment, and services which he purchases after spending production, inflation etc. money on them. In order to understand the concept of Consumer’s Equilibrium let us understand the • Economists should also suggest how concept of total utility, marginal utility and law of the resources of the economy should be diminishing marginal utility etc. distributed among various individuals and groups. 47. Consumer’s equilibrium takes at a point where: • Economics should also point out the plus and minus points of different economic systems. 43. The propounder of Scarcity concept is (a) Samuelson (a) MU = Price (b) MU < Price (b) Watson (c) MU > Price (d) None of these (c) K.E. Boulding 48. The capability of a commodity to satisfy human wants is: (d) Gardner Ackely 44. Scarcity requires that people must do which (a) Consumption (b) Utility of the following things? (c) Quality (d) Taste (a) Cooperate (b) Make choices 49. When marginal utility is negative, then total utility: (c) Competition (d) Trade 45. What is the main cause of all economic (a) is maximum problems? (b) Starts decreasing (a) Convenience (b) Abundance (c) increases at decreasing rate (c) Scarcity (d) None of these (d) None of these 46. Choice is created by the 50. How we calculate marginal utility? (a) Abundance of resources (a) ∆TU/∆Q (b) ∆MU/∆Q (b) Non-availability of resources (c) ∆Q/∆TU (d) ∆Q/∆MU (c) Urgency of needs (d) Scarcity of resources

Answers Mock Test Paper–1 1. (a) 2. (d) 3. (c) 4. (d) 5. (d) 6. (a) 7. (a) 8. (c) 9. (a) 10. (a) 11. (b) 12. (c) 13. (c) 14. (b) 15. (a) 16. (b) 17. (d) 18. (b) 19. (a) 20. (c) 21. (b) 22. (c) 23. (c) 24. (b) 25. (d) 26. (a) 27. (b) 28. (b) 29. (d) 30. (a) 31. (a) 32. (b) 33. (a) 34. (a) 35. (a) 36. (a) 37. (d) 38. (c) 39. (a) 40. (a) 41. (c) 42. (c) 43. (a) 44. (b) 45. (c) 46. (d) 47. (a) 48. (b) 49. (b) 50. (a) Mock Test Paper–2 1. (d) 2. (a) 3. (b) 4. (c) 5. (d) 6. (b) 7. (d) 8. (d) 9. (c) 10. (b) 11. (a) 12. (d) 13. (a) 14. (b) 15. (d) 16. (c) 17. (a) 18. (d) 19. (d) 20. (b) 21. (d) 22. (d) 23. (d) 24. (d) 25. (c) 26. (c) 27. (a) 28. (a) 29. (a) 30. (c) 31. (a) 32. (a) 33. (d) 34. (d) 35. (c) 36. (a) 37. (a) 38. (c) 39. (a) 40. (d) 41. (c) 42. (b) 43. (a) 44. (b) 45. (a) 46. (a) 47. (b) 48. (b) 49. (c) 50. (a) Mock Test Paper–3 1. (b) 2. (b) 3. (d) 4. (c) 5. (d) 6. (a) 7. (c) 8. (d) 9. (d) 10. (c) 11. (b) 12. (b) 13. (b) 14. (d) 15. (d) 16. (d) 17. (b) 18. (d) 19. (a) 20. (d) 21. (d) 22. (d) 23. (c) 24. (c) 25. (a) 26. (a) 27. (c) 28. (b) 29. (c) 30. (d) 31. (d) 32. (b) 33. (c) 34. (a) 35. (b) 36. (a) 37. (a) 38. (b) 39. (a) 40. (d) 41. (d) 42. (b) 43. (b) 44. (d) 45. (d) 46. (d) 47. (a) 48. (b) 49. (b) 50. (a) Mock Test Paper–4 1. (d) 2. (a) 3. (d) 4. (d) 5. (d) 6. (a) 7. (d) 8. (a) 9. (c) 10. (b) 11. (a) 12. (a) 13. (a) 14. (a) 15. (a) 16. (c) 17. (c) 18. (d) 19. (a) 20. (d) 21. (d) 22. (c) 23. (c) 24. (c) 25. (d) 26. (a) 27. (c) 28. (c) 29. (c) 30. (c) 31. (c) 32. (a) 33. (c) 34. (a) 35. (a) 36. (c) 37. (a) 38. (c) 39. (d) 40. (a) 41. (c) 42. (c) 43. (a) 44. (c) 45. (a) 46. (b) 47. (d) 48. (b) 49. (a) 50. (a) Mock Test Paper–5 1. (a) 2. (a) 3. (b) 4. (b) 5. (c) 6. (a) 7. (c) 8. (b) 9. (b) 10. (c) 11. (c) 12. (a) 13. (a) 14. (a) 15. (b) 16. (c) 17. (b) 18. (d) 19. (b) 20. (b) 21. (c) 22. (a) 23. (c) 24. (c) 25. (b) 26. (b) 27. (b) 28. (c) 29. (d) 30. (a) 31. (b) 32. (a) 33. (b) 34. (a) 35. (b) 36. (a) 37. (c) 38. (a) 39. (d) 40. (c) 41. (d) 42. (d) 43. (a) 44. (b) 45. (c) 46. (a) 47. (c) 48. (d) 49. (d) 50. (b)