HBSE Class 12 Sample Paper 2024 Answers Economics

HBSE
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2024
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ECONOMICS (576)
SAMPLE PAPER
CLASS XII SESSION 2023-24

TIME : 3 HRS M.M :80

Q.NO. EXPECTED ANSWER/ VALUE POINTS MARKS

SECTION -A
1. When Marginal Product is –ve then total product is 1
(A) Zero (B) increasing (C) decreasing (D)none of these
(C) decreasing
2. Rectangular hyperbola cost curve is 1
(A) TFC (B) TVC (C) AFC (D)AVC
(C) AFC
3. Law of variable proportion function is mainly related with 1
(A) Cost (B) Production (C) Revenue (D) none of these
(B) Production
4. In Perfect Competition market firm demand curve is 1
(A) Positive (B) Negative (C) Parallel to OX Axis (D) Parallel to OY Axis
(C) Parallel to OX Axis
5. Which one is study in micro economics 1
(A) National Income (B) Trade Cycle (C) Theory of Demand (D)
inflation
(C) Theory of Demand
6. AR curve is also known as Demand curve.(Demand curve/ Supply curve) 1

7. Pepsi and Coke are substitute goods. (Complementary / Substitute) 1
8. PPC are Concave. ( Convex / Concave) 1
9. Assertion (A): Average cost is U shape. 1
Reason (R): Law of Variable proration is applicable in short run.

a. Both Assertion (A) and Reason (R) are true and Reason (R) is
the correct explanation of Assertion (A)
10. Assertion (A): Giffen goods are exception to law of demand. 1
Reason (R): Supply curve is +ve slopes.

b. Both Assertion (A) and Reason (R) are true and Reason (R) is the
not correct explanation of Assertion (A)

11. What are causes of economics problems ?
1. Unlimited wants: human have unlimited wants and these are increasing 1
day by day.
2. Limited resources: The resources to fulfill above unlimited wants are
limited i.e. they are scarce . 1
3. Alternative uses: The limited resources have alternative uses that why
we have to make choices. 1

OR
Explain consumer’s equilibrium with the help of Indifference curves approach

In terms of IC analysis, a consumer will be in the equilibrium when following
conditions fulfill :

1. MRS (Marginal Rate of Substitution ) = Px /Py (Slope of price line) 1
2. IC is convex to the origin at the point MRSxy = Px /Py
1

1

(Use diagram )

12. What do you mean by TR, MR and AR ?
Total Revenue : Total revenue is the sum of all sale receipts or income of a
firm.
1
TR=AR *Q
Marginal Revenue: It is the change in total revenue which results from the sale
of one more or less unit of output.

MR=TRn –TRn-1 or ∆TR/∆Q 1
Average Revenue: Average revenue is the per unit revenue received from the
sale of a commodity
1
AR= TR/Q

13. Explain the law of Constant Return to Factor with the help of table and
diagram.

Constant Return to Factor : In the short run with fixed factors if we increase
variable factors then total products increase at constant rate and in this 1
situation marginal product and cost will remain constant.

No. of 1 2 3 4 5 6 7
labors 1
Capital 1 1 1 1 1 1 1
TP 10 20 30 40 50 60 70
MP 10 10 10 10 10 10 10

2

OR
Explain the law of Diminishing Return to Factor with the help of table and
diagram.

Diminishing Return to Factor : In the short run with fixed factors if we
1
increase variable factors then total products increase at increase rate and in this
situation marginal product will increase and cost will decrease .

Labours 1 2 3 4 5 6 7 1
Capitals 1 1 1 1 1 1 1
TP 5 9 12 14 15 15 14
MP 5 4 3 2 1 0 -1

2

14 Calculate AVC, AFC ,TVC and MC

Output 0 1 2 3 4 5 6
TC 40 80 110 126 128 135 180

Output 0 1 2 3 4 5 6

TC 40 80 110 126 128 135 180
TFC 40 40 40 40 40 40 40
TVC 0 40 70 86 88 95 140
1

AFC - 40 20 13.33 10 8 6.67 1
AVC - 40 35 28.7 22 19 23.3 1
MC - 40 30 16 2 7 45 1

15. Explain price equilibrium with table and diagram.

Price Equilibrium:
when market forces will be equal to each other i.e. market demand is equal to
1
market supply then there will be price equilibrium.

Price 1 2 3 4 5

Quantity 50 40 30 20 10
demanded

Quantity 10 20 30 40 50
1
supplied

2

Explain table and diagram.

16.
Explain the total expenditure method of measuring price elasticity of demand.

It shows how much total expenditure of a good change and in which direction
due to change in the price of a good. 1

1) If price ↑ or ↓ and TE remain constant then Ed= 1

2) If price ↑ and TE ↓ or price ↓ and TE ↑ then Ed > 1

3) If price ↑ and TE ↑ or price ↓ and TE↓ then Ed < 1 2

Price Quantity Total Exp. Ed
1 10 10 Unitary
2 05 10
1 10 10 Greater than
2
2 04 08 unit
1 10 10 Less than unit
2 06 12

1

Explain table and diagram.
OR

What is Law of Demand ? Why does Demand Curve Slope Upwards from left
to right ?

Law of Demand: Law of demand states that other things being equal, there is
inverse relation between price and quantity demanded.
1.5
If Demand Curve Slope Upwards from left to right then demand curve will be
+ve slope.
The main causes are given below:
1. Goods of conspicuous consumption: in such case higher price means
more consumption. 1.5

2. Giffen goods: When price of a giffen good falls, its quantity demanded
also falls and vice versa. Its price effect is +ve and income effect is –ve. 1.5

3. Consumer’s ignorance: this can also be possible when consumers 1.5
judge quality of the goods by its price only.

Explain above points in details.

17. What do you mean by Perfect Competition market? Explain its main features.

Meaning:
Perfect competition is a market situation where large number of 1
buyers and sellers are buying and selling homogenous products at equal price.

Main features:-
1. Large no. of buyers and sellers

2. Homogenous products
3. AR=MR
4. Firms is price taker and industry is price maker
5. Perfect knowledge
6. Perfect mobility
7. Lack of transportation cost
8. Lack of advertisement cost 5
Explain any above 5 points which carry one marks each.

OR

Explain the conditions of producer’s equilibrium in terms of marginal revenue
and marginal cost.

Meaning of marginal revenue and marginal cost then

i) If MR is greater than MC then firm will increase output
2
ii) If MR is less than MC then firm will decrease output

iii) If MR=MC and MC is rising ,then firm will be equilibrium
2
Conditions of equilibrium
a) MR=MC
b) MC cuts MR from below.

2

Here, consumer will be equilibrium at point K as it fulfill both conditions.

SECTION - B

18 Which one is included in leakage in circular flow of income? 1
(a) borrowing by firms (b) public expenditure (c) investment (d) saving
(d) saving
19 Net investments equal to 1
(a) Gross investment- Depreciation (b)Gross investment + Depreciation
(c) Gross investment ÷ Depreciation (d)Gross investment × Depreciation
(a) Gross investment- Depreciation
20 In National Income following are not included ? 1
(a) domestic services (b) transfer income (c) intermediate goods (d) all of above
(d) all of above
21 Which one is Central bank of India ? 1
(a) RBI (b) SBI (c) PNB (d) HDFC
(a) RBI

22 On which date Financial year start in India ? 1
(a) 1 July (b) 1 January (c) 31 March (d) 1 April
(d) 1 April
23 Dividend a part of Profit . (Interest/ Profit) 1

24 Analysis of General Price level is related Macro with economics. 1
( Micro/Macro)
25 Primary Deficit = Fiscal Deficit - Interest Paid. 1
(Revenue Deficit / Fiscal Deficit)
26 Assertion (A):M3 is boarder concept than M1. 1
Reason (R): Central bank control the money supply.

a. Both Assertion (A) and Reason (R) are true and Reason (R) is the
correct explanation of Assertion (A)
27 Assertion (A): Bank Rate is a part of monetary policy. 1
Reason (R): Tax is part of monetary policy.

c. Assertion (A) is true , but Reason (R) is false.

28 Calculate Marginal Propensity to Consume (MPC) and Marginal Propensity to
Save (MPS)

Income (in rupees) 0 100 200 300 400
Consumption (in rupees) 60 110 150 180 200
Change in income - 100 100 100 100 0.5
Change in consumption - 50 40 30 20 0.5
MPC - 0.5 0.4 0.3 0.2 1
MPS - 0.5 0.4 0.7 0.8 1

OR
The saving function of an economy is S = -200 + 0.25Y.Calculate
i.) Autonomous consumption (ii) Consumption Function
iii) Investment multiplier (K)

S=-200+0.25Y
1
i) When Y is zero then S= -200
So Autonomous Consumption = 200
(ii) C=Y-S
C= Y-(-200+0.25Y)
C= Y+200-0.25Y 1
C=200+0.75Y
So Consumption function is C = 200 + 0.75Y

(iii) Investment Multiplier (K) = 1/MPS

K=1/0.25
K=4 1

29 What are difference between Micro and Macro Economics?

MICRO ECONOMICS MACRO ECONOMICS
It studies with individual economics It studies national economy as well
units as its various aggregates 1
It primary deals with individual It is the study of aggregates such as
income , output, price of goods etc. national income , output and general
price level. 1
It covers several issues like demand, It covers several issues like
supply, factor pricing, product distribution, national income,
pricing, economic welfare, employment, money, general price
production, consumption, and more. level, and more.
1

One marks for each differences
30 .What do you mean by government budget and its objectives ?

A government budget is a country’s financial report explaining item-wise
calculations of future revenue and expenditure. The budget explains the income
and expense of a nation.
1
In India the government presents its budget in front of the Lok Sabha,
explaining an estimated receipt and expense for the upcoming financial year.
The fiscal year starts from 1st April and concludes on 31st March of the next
year.
Objectives :-
1. Reallocation of resources
2. Minimise inequalities in income and wealth
3. Economic stability 1
4. Manage public enterprises
1
5. Economic growth.
6. Decrease regional differences. 1
Explain above any three points.
31 What do you mean by Investment Multiplier? Explain the process of
Investment Multiplier assuming change in Investment (∆I) is 2000 crores and
marginal propensity to consume (MPC) is 0.5.

Investment Multiplier:- Investment multiplier is the ratio of an increase of
income to given increase in investment. 1

K= change in income / change in investment

Multiplier process :-

Increase in Increase in Increase in Increase in
investment income consumption saving
2000 2000 1000 1000 3
1000 500 500
500 250 250
- - -

- - -
4000 2000 2000

K=1/1-MPC =1/1-0.5 =1/0.5 =2

K=∆Y/∆I =∆Y/2000 =2

∆Y=2000*2 =4000 crores

OR

What is deficient demand ? How to overcome from it with the help of fiscal
measures? 1
Deficient Demand :
Deficient Demand refers to a situation in which aggregate demand (AD) is short
of aggregate supply (AS) corresponding to full employment.
1
AD<AS : corresponding full employment 1
1
Deficient Demand and Fiscal measures:
1. Decrease in tax
2. Increase in public expenditure
3. Increase in Deficit financing
4. Decrease in Public Debt

Explain any three points

32 What are differences between Balance of Payment and Balance of Trade ?

Basis BOT BOP
Meaning It refers to difference It is a systematic record of all
between amount of exports economic transactions 1
and imports of visible between residents of a country
items. and rest of the worlds, over a
given period of time.
Components It includes only visible It includes visible items , 1
items. invisible items and capital
transfers.
Scope It is narrow concept as it is It is a wider concept as it
a part of BOP. includes BOT. 1

Capital It does not record any It records all Capital
transactions Capital transactions. transactions. 1
33. Explain meaning of money and functions of money.

Money : A medium of exchange that is centralized, generally accepted,
1
recognized, and facilitates transactions of goods and services, is known as
money.
Function of Money:

i) Medium of exchange:
● It means that money can be used to make payments for all the transactions
of goods and services.
1
● A buyer can buy goods through money, and a seller can sell goods for
money.
● It is an essential function of money.
ii) Measure of value:
● Money serves as a measure of value.
1
● The value of all goods and services is expressed in terms of money.

iii) Standard of deferred payments:
● It means that money acts as a ‘standard’ for making future payments. 1
● It has made deferred payments much easier than before.
● Example: When we borrow money from somebody, we have to return both
the principal as well as the interest amount in the future.
● Money is a convenient mode of calculation and payment of interest amount
to be paid in the future.
● This function has facilitated borrowing and lending.
● It has also led to the creation of financial institutions.
iv) Store of value:
● A store of value implies a store of wealth.
● Money can be easily stored for future use. 1
● It is the most convenient and economical means to store earnings and
wealth.
v) Transfer of value:
● Money also serves for transfer of value. 1
● It facilitates buying and selling of goods not only in the domestic country
but also in other parts of the world.

“Money is a matter of functions four a medium, a measure, a standard and a store.
It does not clear the picture we may add transferability more”

OR
Distinguish between Commercial banks and Central banks?
.
Basis Central bank Commercial banks

Meaning Central bank is the apex It is a type of financial
financial institution of the institution that is concerned
country that is concerned with with providing banking
formation of monetary services to the general public
1

policies and the way money and businesses by facilitating
should be regulated in the deposit, offering loan
economy facilities
Ownership Central bank is always having Commercial banks either be
public ownership public , private and foreign in
ownership. 1
No. of There is only one central bank There can be many commercial
banks in a country. banks in a country. 1
Profit It does not operate for profit These operate with profit 1
Motive motive motives.

Issue of It has monopoly over issue of These can not issue notes in
notes notes the economy. 1

Clients Commercial banks and Individual and businesses are
Government are main clients main clients. 1
Monetary Central bank designs and Commercial banks only
policy controls all instrument of executes the monetary policy
monetary policy of the as directed by the central
country . bank.

One marks for each differences
34. Explain Value Added Method of measuring National Income ?

The value added method is one of the three methods to determine national
income. The other two methods are the expenditure method and income
method.
It is also known as product method or output method, and its primary objective
is to calculate the national income by taking the value added to a product during
the various stages of production into account. 1
Different steps of value added methods:

1. CLASSIFICATION OF PRODUCTIVE ENTERPRISES
i) Primary Sector
ii) Secondary Sector
iii) Tertiary Sector 1

2. ESTIMATION OF VALUE ADDED

Value Added (GDP at MP)= Value of Output - Intermediate Consumption

Here, Value Of Output = Sales + Change In Stocks

Change In Stocks = Closing Stocks - Opening Stocks
2
Intermediate Consumption:
It refers to value of all non-factors inputs. Mainly, it includes value

of raw material used in production process.

3. ESTIMATION OF NATION INCOME
Value Added (GDP at MP)= Value of Output - Intermediate Consumption
- Depreciation
- Net Indirect Tax
+ Net Factor Income from Abroad(NFIA) 2
National Income (NNP at FC)
Precautions ;
1. Sale and purchase of second hand goods are not included in NY.
2. Commissions paid on sale of second hand goods are not included in NY.
3. Intermediate consumptions are also not included in NY.

OR
Calculate National Income by (a) Income Method (b) Expenditure Method
Items (rupees in
crores)
i) Compensation of Employees 600
ii) Govt. final consumption expenditure 550
iii) Net factor income from abroad -10
iv) Net export -15
v) Profit 400
vi) Net indirect tax 60
vii) Mixed income of self employed 350
viii) Rent 200
ix) Interest 310
x) Private final consumption expenditure 1000
xi) Net domestic capital formation 385
xii) Consumption of fixed capital 85
xiii) Change in stock 20

National Income by Income Method
Compensation of Employees 600
+Rent 200
+Interest 310
+Profit 400
+ Mixed income of self employed 350
Domestic Income (NDP at FC) 1860 2
+ Net factor income from abroad +(-10)
National Income (NNP at FC) 1850 1

National Income by Expenditure Method
Private final consumption expenditure 1000
+ Govt. final consumption expenditure 550
+Net domestic capital formation 385
+Net export +(-15)
Net Domestic Product at Market Price (NDP at MP) 1920 2
Add : Net factor income from abroad +(-10)
Less : Net indirect tax -60
National Income (NNP at FC) 1850 1

XII

i

ii

iii

iv

v

vi

–ve
a) b c d
c
Retangular Hyperbola
a) b c d

c

a) b c d

b

a) b c OX d OY

c OX

a) b c d

c

(A): U
( R) :

(a) (A) ( R) ( R) ( A)

(A):
( R) :
(b) (A) ( R) ( R) ( A)

(a

b

c

MRSxy)=Px/ Py

TR=AR x Q

MR= TRn – TRn-1 = TR/Q

AR = TR/Q

TP
MP MC
1 2 3 4 5 6 7

1 1 1 1 1 1 1

10 20 30 40 50 60 70

10 10 10 10 10 10 10

TP
MP MC
1 2 3 4 5 6 7

1 1 1 1 1 1 1

5 9 12 14 15 15 14

5 4 3 2 1 0 -1

AVC AFC TVC
MC

TC

TFC
TVC

AFC

AVC

MC

A

B

C

PQ
Ed =1

Ed>1

Ed

– 1½

i

ii 1½
1½
Ve
iii 1½

AR MR

MC=MR
MC MR

A MR MC

B MR MC

C MR MC MC

a) b) c) d)

d)

a) b)
c) ÷ d) x

a)

a) b) c) d)

d)

a) RBI b) SBI c) PNB d) HDFC

a) RBI

a) b) c) d)

d)

=

(A): M3,M1
( R) :
(a) (A) ( R) ( R) ( A)

(A):
( R) :
( c) (A) ( R)

S = -200+ 0. 25Y
i ii iii K

S=-200+0.25Y
i S= -200 + 0.25 (0) = -200
=200
ii = C=Y-S
C=Y-(-200+0.25Y)
C=Y+200-0.25Y
C=200+0.75Y
iii (k) = _1__ = _1__ = 100 =4
MPS 0.25 25

I MPC

K= Y = 1 = 1
I 1-MPC MPS
I Y C S
   
   
   
   
   
   
   
K = 1 = 1 = 1 =2
1-MPC 1-0.5 0.5
K = Y = 2
I
Y = 2
2000
Y = 4000

AD
AS



i
ii
iii

GDPMP =
=
=

3
GDPMP) =
(Depreciation)
(NIT)
(NFIA)
(NNPFC)

3-

a) b

i
ii
iii
iv
v
vi
vii

viii
ix
x
xi
xii
xiii

= 600
= 200
= 310
= 400
= 350
NDPFC) = 1860
= + (-10)
(NNPFC) = 1850

= 1000
+ = + 550
+ = +385
+ = +(-15)
(NDPMP) = 1920
NIT) = - 60
+ NFIA) = + (-10)
(NNPFC) =