Class 12 Economics 2019 Board Exam

Give any two examples of flow concept.

(a) State any two components of M₁ measure of money supply.
(b) Elaborate any two instruments of Credit Control, as exercised by the Reserve Bank of India.
OR
Define Credit Multiplier. What role does it play in determining the credit creation power of the banking system ? Use a numerical illustration to explain.

Suppose in a hypothetical economy, the income rises from ₹ 5,000 crores to ₹ 6,000 crores. As a result, the consumption expenditure rises from ₹ 4,000 crores to ₹ 4,600 crores. Marginal propensity to consume in such a case would be ________. (Choose the correct alternative)
(a) 0.8
(b) 0.4
(c) 0.2
(d) 0.6

Define the term 'tax'.

(a) Define “Trade surplus”. How is it different from “Current account surplus” ?
(b) “Indian Rupee (₹) plunged to all time low of ₹ 74.48 against the US Dollar ($)”.
– The Economic Times
In the light of the above report, discuss the impact of the situation on Indian Imports.

Define the problem of double counting in the computation of national income. State any two approaches to correct the problem of double counting.
OR
“Gross Domestic Product (GDP) does not give us a clear indication of economic welfare of a country.” Defend or refute the given statement with valid reason.

In order to encourage investment in the economy, the Central Bank may ___________. (Choose the correct alternative)
(a) Reduce Cash Reserve Ratio
(b) Increase Cash Reserve Ratio
(c) Sell Government securities in open market
(d) Increase Bank Rate

If in an economy :
Change in initial Investments (ΔI) = ₹ 500 crores
Marginal Propensity to Save (MPS) = 0.2
Find the values of the following :
(a) Investment multiplier (k)
(b) Change in final income (ΔY)

What is meant by primary deficit ?
OR
What is meant by fiscal deficit ?

(a) Define “Trade Surplus” and “Trade Deficit”.
(b) Discuss briefly the concept of managed floating system of foreign exchange rate determination.