CBSE Class 12 Economics Question Paper 2020 Set 58-4-2 Solutions

HMJ/1
Strictly Confidential: (For Internal and Restricted use only)
Senior School Certificate Examination - 2020
Marking Scheme – ECONOMICS
SUBJECT CODE:030 PAPER CODE –58/4/2

General Instructions: -

1. You are aware that evaluation is the most important process in the actual and correct
assessment of the candidates. A small mistake in evaluation may lead to serious problems
which may affect the future of the candidates, education system and teaching profession. To
avoid mistakes, it is requested that before starting evaluation, you must read and understand
the spot evaluation guidelines carefully. Evaluation is a 10-12 days mission for all of us.
Hence, it is necessary that you put in your best efforts in this process.

2. Evaluation is to be done as per instructions provided in the Marking Scheme. It should not be
done according to one’s own interpretation or any other consideration. Marking Scheme should
be strictly adhered to and religiously followed. However, while evaluating, answers which are
based on latest information or knowledge and/or are innovative, they may be assessed
for their correctness otherwise and marks be awarded to them.

3. The Head-Examiner must go through the first five answer books evaluated by each evaluator on
the first day, to ensure that evaluation has been carried out as per the instructions given in the
Marking Scheme. The remaining answer books meant for evaluation shall be given only after
ensuring that there is no significant variation in the marking of individual evaluators.

4. Evaluators will mark( √ ) wherever answer is correct. For wrong answer ‘X”be marked.
Evaluators will not put right kind of mark while evaluating which gives an impression that answer
is correct and no marks are awarded. This is most common mistake which evaluators are
committing.

5. If a question has parts, please award marks on the right-hand side for each part. Marks
awarded for different parts of the question should then be totaled up and written in the left-hand
margin and encircled. This may be followed strictly.

6. If a question does not have any parts, marks must be awarded in the left-hand margin and
encircled. This may also be followed strictly.

7. If a student has attempted an extra question, answer of the question deserving more marks
should be retained and the other answer scored out.

8. No marks to be deducted for the cumulative effect of an error. It should be penalized only once.

9. A full scale of marks 0-80 has to be used. Please do not hesitate to award full marks if the
answer deserves it.

10. Every examiner has to necessarily do evaluation work for full working hours i.e. 8 hours every
day and evaluate 20 answer books per day in main subjects and 25 answer books per day in
other subjects (Details are given in Spot Guidelines).

11. Ensure that you do not make the following common types of errors committed by the Examiner
in the past:-

58/4/2 Page | 1

 Leaving answer or part thereof unassessed in an answer book.
 Giving more marks for an answer than assigned to it.
 Wrong totaling of marks awarded on a reply.
 Wrong transfer of marks from the inside pages of the answer book to the title page.
 Wrong question wise totaling on the title page.
 Wrong totaling of marks of the two columns on the title page.
 Wrong grand total.
 Marks in words and figures not tallying.
 Wrong transfer of marks from the answer book to online award list.
 Answers marked as correct, but marks not awarded. (Ensure that the right tick mark is correctly
and clearly indicated. It should merely be a line. Same is with the X for incorrect answer.)
 Half or a part of answer marked correct and the rest as wrong, but no marks awarded.

12. While evaluating the answer books if the answer is found to be totally incorrect, it should be
marked as cross (X) and awarded zero (0)Marks.

13. Any unassessed portion, non-carrying over of marks to the title page, or totaling error detected
by the candidate shall damage the prestige of all the personnel engaged in the evaluation work
as also of the Board. Hence, in order to uphold the prestige of all concerned, it is again
reiterated that the instructions be followed meticulously and judiciously.

14. The Examiners should acquaint themselves with the guidelines given in the Guidelines for spot
Evaluation before starting the actual evaluation.

15. Every Examiner shall also ensure that all the answers are evaluated, marks carried over to the
title page, correctly totalled and written in figures and words.

The Board permits candidates to obtain photocopy of the Answer Book on request in an RTI
application and also separately as a part of the re-evaluation process on payment of the
processing charges.

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Q. SECTION- A (MACRO ECONOMICS) Marks
No. Allocation
EXPECTED ANSWER
Question: State, whether the given statement is true or false:
1 ‘Unexpected obsolescence is a component of depreciation.’
Answer: False 1
2 Question: Two components of money supply are ________ and _________.
(fill up the blank with correct answer)
Answer: Two components of money supply are
a) i) Currency with public ii) Demand deposits held by commercial banks ½+ ½
Or
Question: The main aim of monetary policy is _____. (Choose the correct alternative)
a) (a) to bring price stability in the economy c) to increase trade surplus
b) (b) employment generation in the country d) to generate greater tax revenue
Answer:(a) to bring price stability in the economy 1
3 Question: If income rises from ₹ 50,000 to ₹ 60,000, consumption increases from ₹ 40,000 to ₹
48,000. In this situation, what will be the value of Marginal Propensity to Consume (MPC)?
a) 0.80 b) 0.20 c) 0.10 d) 0.90
Answer: a) 0.80 1
4 Question: Loans offered by commercial banks _________ (increase/ decrease) the money
supply in the economy. (fill up the blank with correct alternative) 1
Answer: increase
Question:₹ 2,000 note lying in the wallet of Rohini, a student is an example of ____ (stock/flow)
5 variable. (Fill up the blank with correct alternative) 1
Answer: Stock
6 Question: State whether the given statement is true or false:
‘Expenditure on UjjwalaYojna launched by the Government is an example of capital
Expenditure.’ 1
Answer: False
7 Question: The sum of factor payments is equal to ______.
a) Domestic Income
b) National Income
c) Per Capita Real Income
d) Per Capita Nominal Income
Answer:
a) Domestic Income or b) National Income (any of the options should be allotted marks) 1
8 Question: Define inventory (stock)
Answer: Inventory is unsold goods, unused raw material or semi- finished goods which a firm 1
carries from one year to the next.
9 Question: Give any one example of ‘debt creating capital receipts’ in the Government Budget.
Answer: Borrowings. 1

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10 Question: Define intermediate consumption.
Answer: Intermediate consumption refers to the value of goods and services used during the 1
production process.
11 Question: “Management of a water polluting oil refinery says that it (oil refinery) ensures
welfare through its contribution to Gross Domestic Product (GDP).”
Defend or refute the argument of management with respect to GDP as a welfare measure of
the economy.
Answer: No, the given statement is not true. The value added by oil refinery to the Gross
Domestic Product (GDP) may also be polluting the nearby source of water. Such harmful effects
that the refinery is causing to people and marine life is not penalized for the same. Thus these 3
negative externalities are not ensuring the welfare of the economy through Gross Domestic
Product (GDP). (to be marked as a whole)
12 Question: Calculate Net Value added at Factor Cost (NVA FC) from the following data:
S. No. Particulars Amount (in ₹ crores)

(i) Value of Output 800

(ii) Intermediate Consumption 200

(iii) Indirect Taxes 30

(iv) Depreciation 20

(v) Subsidies 50

(vi) Purchase of machinery 50
Answer: NVAFC = (i) – (ii) – (iv) – [(iii) – (v)] 1½
= 800 – 200 – 20- [30 – 50] 1
= ₹ 600 crores ½
OR
Question: State three components of Income from Property and Entrepreneurship.
Answer: Three components of Income from Property and Entrepreneurship are
a) Rent / Royalty 1
b) Interest 1
1
c) Profit
13 Question: Explain the function of central bank as ‘Banker, Agent and Advisor’ of the
government.
Answer: As the Government’s banker, the Central bank accepts receipts and makes payments
on behalf of the government. It lends loans to the government for varied purposes. As the
agent and advisor to the government, it manages public debt on behalf of the government 4
andalso advices on policy matters. (to be marked as a whole)
OR
Question: Elaborate how a Central Bank stabilizes money supply through ‘Bank rate’.
Answer: Bank rate is the rate of interest at which central bank lends money to commercial
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banks to meet their long term needs. An increase in bank rate may force commercial banks to
increase their lending rate. It will make borrowings costlier to general public. This leads to 4
discouraging people to borrow and will thus restrict money supply in the economy or vice-
versa. (to be marked as a whole)
14 Question: Define effective demand. Discuss how, effective demand can be restored if ex-ante
Aggregate Demand (AD) is less than ex-ante Aggregate Supply (AS).
Answer: Effective Demand refers to that level of employment where Aggregate Demand (AD) is 1
equal to Aggregate Supply (AS).
If ex-ante Aggregate Demand (AD) is less than ex-ante Aggregate Supply (AS), it means buyers
are planning to buy less than what producers are planning to produce. It will lead to creation of
undesired inventories in the hands of producers. As a result, producers might plan to reduce 3
the production. This mechanism will continue to operate till the two forces become equal.
15 Question: Elaborate the objective of ‘allocation of resources’ in the Government Budget.
Answer: Allocation of resources: Government seeks to allocate resources with a view to
balance the goals of all sections of the society.Production of goods and sevices which are
injurious to health may be discouraged through taxation policy. Similarly, production of socially 4
beneficial goods may be encouraged through subsidies. If private sector does not take initiative
in certain activities (Public Goods) government may directly control them like water supply and
sanitation etc. (to be marked as a whole)
16 Question: State, giving valid reasons whether following statements are true or false:
(i) Trade deficit is always a great cause of worry for an economy.
(ii) Depreciation of currency has same effect on exports as devaluation of currency.
(iii) ‘Indians investing in assets abroad’ will be recorded under debit side of capital
account in Balance of Payments.
Answer:
(i) False, trade deficit is a lesser cause of worry if it reflects a rise in investment (imports of
capital goods) which will build the capital stock and increase the future output in an 2
economy.
(ii) True, both depreciation and devaluation have same effect on exports of an economy. 2
The two terms, although synonymous, are used in different context. The term
devaluation is used in a fixed exchange rate system whereas depreciation is under the
flexible exchange rate system.
(iii) True, Indians investing in assets abroad will lead to an outflow of foreign currency; it will 2
be recorded under debit side of capital account of balance of payment.
Or
Question: a. Explain what can be the likely impact of depreciation of the home currency on
imports to the country.
Answer: a) Depreciation of home currency results in a fall in the value of domestic currency
(say ₹) in terms of foreign currency (say $). Consequently foreign goods may become dearer in 3
terms of the domestic currency, leading to losses for importers. Hence, imports of the economy
may tend to fall.
Question: b. Distinguish between Current Account Deficit (CAD) and Current Account Surplus (CAS).
Answer: b. Current Account Deficit (CAD) refers to excess of payments for value of imports of 1½
visible items, invisible items and unilateral transfers over the receipts from value of export of
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visible items, invisible items and unilateral transfers. Whereas;
Current Account Surplus (CAS) refers to excess of receipts from value of exports of visible items,
invisible items and unilateral transfers over payments for value of import of visible items, 1½
invisible items and unilateral transfers.
17a) Question: a) On the basis of following information, identify whether the economy is in
equilibrium or not:
Sr. No. Particulars Amount

(i) Autonomous Consumption and Investment Expenditure ( ) ₹ 200 crores

(ii) Marginal Propensity to Save (MPS) 0.7

(iii) National Income ₹ 1,000 crores

Answer: a) The economy is in equilibrium when AD = AS (Y) ½
AD = + MPC (Y) ½
AD = 200 + 0.7 (1,000) ( Given Y = ₹1,000) ½
AD = 200 + 700 ½
½
AD =₹ 900crores ½
Therefore, AD (₹ 900crores) < AS (₹ 1,000crores), the economy is not in equilibrium

Question: Answer the following questions on the basis of given figure

(i) At which level of income, Average Propensity to Consume will be equal to one and
why? 1
(ii) What is the significance of saving curve above the point B? 2
Answer (b): (i) Average Propensity to Consume will be equal to one at point B, as here Average
Propensity to Save is zero.
(ii) Point B indicates break-even level of income where Savings (S) are zero.

For Visually Impaired candidates only
Question: (b) i) Define Autonomous Consumption.
ii) What is the significance of dis-savings?
Answer: b) i. Autonomous Consumption: that consumption expenditure which be 1
undertaken at zero level of income.
ii) Dis-savings occur when Consumption (C) is greater than Income (Y). This signifies that 2
spending for basic needs which are necessary for survival is financed by past savings and
borrowings.

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Section B INDIAN ECONOMIC DEVELOPMENT
18 Question: Which of the following countries adopted ‘One Child Policy’ as a measure to control
population? (Choose the correct alternative)
a) India b) China c) Pakistan d) Russia
Answer: b) China 1
19 Question:World Trade Organisation (WTO) was established in 1995, as a successor organisation
to _____. (Fill up the blank with correct answer)
Answer: General Agreement on Trade and Tariff (GATT) 1
20 Question: Define mixed economy.
Answer: Mixed economy is an economic system where the market system will provide
whatever goods and services it can provide well, and the government will provide essential
goods and services which the market fails to do. (any other correct definition to be allotted marks) 1
21 Question:_____policy followed in first seven five year plans of India, aimed at substituting
imports with domestic production. (Fill up the blanks with correct answer)
Answer: Import substitution 1
22 Question: In past few decades ______ (primary/ secondary/ tertiary) sector has created
maximum jobs opportunities in India. (Fill up the blank with correct answer)
Answer: tertiary 1

23 Question: The main aim of ‘Great Leap Forward’ (GLF) in China was to ensure rapid increase of
_____. (Choose correct alternative)
a. Agriculture b. Industries c. Services d. exports
Answer: b) industries 1
24 Question: Which of the following is not a benefit of organic farming?
a. Cheaper inputs c. Greater import possibilities
b. Attractive returns on investment d. Higher nutritional value
Answer: c) Greater import possibilities 1
25 Question: Define disguised unemployment.
Answer: Disguised unemployment is a situation where in the number of workers engaged in a
work is more than actually/ optimally required. 1
26 Question: Introduction of Economic Reforms in China took place in the year____.
(Choose the correct alternative)
a. 1978 b. 1980 c. 1988 d. 1991
Answer: a.1978 1

27 Question: State whether the following statement is true or false:
‘World Bank is known as International Bank for Registration and Delimitation (IBRD).’ 1
Answer: False
Or
Question: Define Marketed Surplus
Answer: The portion of agricultural produce which is sold in the market by the farmers is called
marketed surplus. 1

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28 Question- Compare and analyse the given data of India and China with valid reasons :
Country Annual Growth rate of population Gender Ratio (per thousand males)
(2015)
India 1.2% 929
China 0.5% 941
Source: World Development Indicators, 2015
Answer-
a) The given data shows that China could arrest its annual population growth rate with the
implementation of some stringent measures in late 1970’s like the introduction of One
Child Norm. This step has been instrumental in controlling the growth of population in
China. India stands virtually more than double to China’s annual population growth rate
1½
of 1.2% as compared to China’s annual population growth rate of 0.5% p.a.
b) The social dynamics of both the countries are similar to each other; sex ratio is low and
biased in both the countries due to preference for male child. Whereas, India stands at 1½
929 females per 1000 males, China is not far ahead at 941 females per 1000 males.
29 Question:“Rapid increase in economic growth surely trickles down to the people under the
absolutely poor category.” Defend or refute the given statement with valid argument.
Answer- This statement is refuted because-
(i) Population growth has resulted in a very low growth in per capita income
(ii) The Green Revolution has increased the regional disparity and also the gap between 1
1
the rich and the poor farmers. 1
(iii) The gains of economic growth have been grabbed by the rich.
(any other valid argument to be awarded marks)
Or
Question: ‘Human Capital Formation gives birth to innovation, invention and technological
improvements.” Do you agree with the given statement? Support your answer with valid
arguments.
Answer: The given statement is correct. Human Capital Formation not only increases the
productivity of available human resources but also stimulates innovation and creates ability to
adopt new technologies. 3
Investment in education creates ability to adopt newer technologies, facilitates invention and
innovation since educated workforce generally adapts to modern technologies and innovation.
(any other valid argument to be allotted marks) (to be marked as whole)
30 Question: Distinguish between :
i) Tariff and non-tariff barriers
Answer: (i) The barriers which are imposed on imports of goods and services to make them
relatively costlier and to protect the domestic producers from the stiff international 1
competition are known as tariff barriers e.g. Import Duties.
Where as;
Non-tariff barriers are those barriers which are imposed on quantity of import and export of
1
goods and services e.g. quota and import licensing.
Question: Distinguish between :
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ii) Bilateral and multilateral trade 1
Answer: (ii) The trade (export and import) between two countries is known as bilateral trade.
Whereas, 1
The trade (export and import) among more than two countries is known as multi- lateral trade.

31 Question:a. State the names of six Indian Systems of Medicines (ISM) under AYUSH scheme
ofGovernment of India.
Answer: The six Indian Systems of Medicines (ISM) under AYUSH scheme ofGovernment of ½x6 =
India includes: Ayurveda, Yoga, Unani, Siddha, Naturopathy and Homeopathy. 3

b. Name any two non-conventional sources of energy.
Answer: The two non-conventional sources of energy are: solar energy and wind energy. ½+½
32 Question- Discuss briefly any two salient features of India’s pre independence occupational structure.
Answer-The occupational structure of India on the eve of independence had the following two main
features:
i) Predominance of agriculture sector:The agricultural sector accounted for the largest share of
workforce with approximately three-fourth of the workforce depending on agriculture, directly
or indirectly. 2
ii) Growing regional variation- Due to rise of manufacturing and services sector in some parts of
India (like the then Madras, Bombay and Bengal Presidencies) the dependency ratio of
workforce on agricultural sector declined. (any other relevant argument to be allotted marks) 2
Or
Question: Discuss briefly the rationale behind choosing ‘self-reliance’ as a planning objective for the
Indian economy.
Answers- The main rationale behind choosing ‘self-reliance’ as a planning objective for the Indian
economy were-
i. To reduce foreign dependence: Planning objective of ‘self-reliance’ targeted to promote
economic growth and modernisation, the Indian five year plans in the early years of post-
2
independence era stressed on the use of domestic resources in order to reduce our
dependence on foreign countries.
ii. To avoid foreign interference: In the post-independence era it was feared that the dependence 2
on the imported food supplies, foreign technology and foreign capital may increase foreign
interference in the policies of our country.
33 Question:
(a) Define Worker-population ratio. What does it signifies?
Answer: Worker-population ratio refers to the ratio of total number of workers to the total population.
It is generally expressed in percentage. 2
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑜𝑟𝑘𝑒𝑟𝑠
Worker population ratio = x 100
𝑇𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛

This ratio signifies the proportion of population that is actively contributing to the production of goods 1
and services of a country
Question: (b) Analyse the trends in sectoral distribution of workforce in India on the basis of data:
Trends in Employment Pattern (Sector-wise), 1972 – 2012 (in %)
Sector 1972-73 1983 1993-94 1999-2000 2011-2012
Primary 74.3 68.6 64 60.4 48.9
Secondary 10.9 11.5 16 15.8 24.3
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Services 14.8 16.9 20 23.8 26.8
Total: 100.0 100.0 100.0 100.0 100.0

b) Answer: The given data indicates that over the given period, the proportion of workforce in primary
sector has gone down rapidly. Whereas, the employment share of both secondary sector and the
services sector has increased. While the share of secondary sector (between 1993-94 and 2011-12) has
gone up by approximately 9%, the corresponding figure for services sector has gone up by
3
approximately 7%. (to be marked as a whole)
(any other relevant explanation to be awarded marks)
Or
Question: (a) “The Prime Minister urged to increase the rural income by increasing non-farm activities”.
Explain how non-farm activities can lead to rise in income of people of rural sector.
Answer: a. Non-farm activities (agro-processing industries, poultary, craft, handloom) provide
alternative avenues for sustainable livelihood and may raise the level of income as the risks due to
fluctuations in production and market prices is generally less. Agriculture in India is mainly a seasonal
occupation, however, during off seasons, it becomes difficult to find employment and stabilize farmer’s
income. Thus, the Prime Minister has urged appropriately in the best interest of the farmers of the rural
India. (to be marked as whole)
3
Question:
(b) “Indian health system needs the increased dose of public expenditure to cure itself.”
Defend or refute the given statement with valid arguments.
Answer:
b. The statement is defended as the improvement in the health system in India has been unreasonably
slow since independence. Indian health system has been a victim of a relatively low public expenditure,
along with other reasons. The health expenditure as a percentage of GDP is abysmally low as compared
to some of the major developing countries. It stood at around 4.7% of the total Gross Domestic Product
(GDP) in the year 2014-15. Thus, actually Indian health system needs the increased dose of public
expenditure to cure itself. 3
(data is only to support the argument, marks should not be deducted if data not provided)
(to be marked as a whole)
34 Question: a) State and discuss any two environmental concerns faced by India in the present times.
Answer: Two environmental concerns faced by India are : (any two)
(i) Air Pollution: In India, air pollution is widespread in urban areas where vehicles and industries are
major contributors to pollution. Air pollution results in health problems and causes severe damage to
the environment. 1½
ii) Global Warming: Global warming is the observed projected increases in the average temperature of
earth’s atmosphere and oceans due to increase in greenhouse gases in the recent past. This has become
a major global concern for the world.
(any other relevant point with explanation)
1½
Question: b) Discuss the importance of credit in rural development.
Answer: Growth of rural economy depends primarily on infusion of capital, from time to time, to realise
higher productivity in agriculture and non-agriculture sectors. As the gestation gap between crop sowing
and realisation of income after production is quite long, farmers borrow from various sources (formal 3
and informal) to meet their requirements on seeds, fertilisers etc. and other family expenses of
marriage, religious ceremonies etc. (to be marked as a whole)

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