CBSE Class 12 Economics Question Paper 2025 Solved Code 58-1-2

SECTION A (Macro Economics)

1. From the set of terms given in Column-I and Column-II, choose the correct pair : [1 Mark]
Column-I | Column-II
(a) Non-tax Revenue | (i) Goods and Services Tax
(b) Indirect Tax | (ii) Free-rider
(c) Capital expenditure | (iii) Borrowings
(d) Private goods | (iv) Rivalrous in nature
(A) (a) - (i)
(B) (b) - (ii)
(C) (c) - (iii)
(D) (d) - (iv)

Answer: (D) (d) - (iv)

Teacher's Note:
a) Private goods are rivalrous: one person's use reduces what is left for others.
b) GST is a tax revenue (indirect tax), free-rider problem belongs to public goods and borrowings are capital receipts, so the other pairs are wrong.

2. If a country exports goods worth of Rs. 600 crores and imports goods worth of Rs. 450 crores, the value of Balance of Trade of the country would be _______ of Rs. _______ crores. [1 Mark]
(A) deficit, 150
(B) surplus, 150
(C) deficit, 1,050
(D) surplus, 1,050

Answer: (B) surplus, 150

Teacher's Note:
a) Balance of Trade = Exports of goods - Imports of goods = 600 - 450 = Rs. 150 crores.
b) A positive value means a surplus; never add exports and imports.

3. In the context of the Commercial Banks, which of the following statements are correct ? (Choose the correct option) [1 Mark]
(I) Deposits received are liabilities for Commercial Banks.
(II) They are creator of credit in the economy.
(III) They accept deposits from general public.
(IV) They accept deposits on behalf of Reserve Bank of India.
(A) (I), (II) and (III)
(B) (II) and (III)
(C) (I) and (II)
(D) (I) and (IV)

Answer: (A) (I), (II) and (III)

Teacher's Note:
a) Deposits are liabilities because banks must repay them to depositors.
b) Commercial banks accept deposits for themselves, not on behalf of the RBI, so statement (IV) is false.

4. Suppose, the value of Average Propensity to Consume (APC) is 0.8 and National Income is Rs. 4,000 crores, the value of saving would be Rs. ________ crores. (Choose the correct option to fill up the blank) [1 Mark]
(A) 100
(B) 200
(C) 500
(D) 800

Answer: (D) 800

Teacher's Note:
a) APS \( = 1 - APC = 1 - 0.8 = 0.2 \).
b) Saving \( = APS \times Y = 0.2 \times 4,000 = \) Rs. 800 crores.

5. Read the following statements : Assertion (A) and Reason (R). Choose the correct option from those given below : [1 Mark]
Assertion (A) : Public goods are those goods that are collectively consumed by the public.
Reason (R) : Public goods are excludable and rivalrous in nature.
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

Answer: (C) Assertion (A) is true, but Reason (R) is false.

Teacher's Note:
a) Public goods are non-excludable and non-rivalrous, so the Reason is false.
b) Excludable and rivalrous are features of private goods - do not mix them up.

6. Suppose, the saving curve of an economy makes an intercept at a negative value of Rs. 50 crores. In the economy, 20% of an increase in income is saved.
In the light of above context, identify the value of investment multiplier (K). [1 Mark]
(A) 2
(B) 5
(C) 10
(D) \( \infty \) (infinite)

Answer: (B) 5

Teacher's Note:
a) 20% of an increase in income is saved, so \( MPS = 0.2 \).
b) \( K = \frac{1}{MPS} = \frac{1}{0.2} = 5 \); the intercept of Rs. 50 crores is extra information and does not affect K.

7. "Irfaan (a student) borrows Rs. 80,000 to finance his college fee. He plans to begin repaying the loan six months after his graduation, making payments over a span of ten years."
Based on above text, identify the indicated function of money. (Choose the correct option) [1 Mark]
(A) Medium of Exchange
(B) Unit of Account
(C) Standard of Deferred Payments
(D) Store of Value

Answer: (C) Standard of Deferred Payments

Teacher's Note:
a) Money makes it easy to settle payments that are due in the future, such as loan repayments.
b) Keywords like "borrow" and "repay later" point to standard of deferred payments.

8. Read the following statements carefully : [1 Mark]
Statement-1 : Managed floating exchange rate system is an amalgamation of fixed and flexible exchange rate system.
Statement-2 : Managed floating exchange rate system is also known as 'hybrid system'.
In the light of the given statements, choose the correct option from the following :
(A) Statement 1 is true and Statement 2 is false.
(B) Statement 1 is false and Statement 2 is true.
(C) Both Statements 1 and 2 are true.
(D) Both Statements 1 and 2 are false.

Answer: (C) Both Statements 1 and 2 are true.

Teacher's Note:
a) Under managed floating, the rate is set by the market but the central bank intervenes when needed.
b) Because it mixes fixed and flexible systems, it is called a hybrid system.

9. From the items given in Column-I and Column-II, choose the correct pair. [1 Mark]
Column-I | Column-II
(a) Income from Property | (i) Old age pension
(b) Income from Entrepreneurship | (ii) Profit
(c) Mixed Income | (iii) Rent free accommodation from an employer
(d) Compensation of Employees | (iv) Interest from capital
(A) (a) - (i)
(B) (b) - (ii)
(C) (c) - (iii)
(D) (d) - (iv)

Answer: (B) (b) - (ii)

Teacher's Note:
a) Profit is the reward of the entrepreneur.
b) Rent free accommodation is compensation of employees and interest is income from property, so (c) and (d) are wrong pairs.

10. In the context of Current Account transactions of Balance of Payment, identify the incorrect statement from the following : (Choose the correct option) [1 Mark]
(A) Export of goods and services are recorded as credit items.
(B) Import of goods and services are recorded as debit items.
(C) All transfer payments are recorded as debit items.
(D) All transfer receipts are recorded as debit items.

Answer: (D) All transfer receipts are recorded as debit items.

Teacher's Note:
a) Receipts (inflow of foreign exchange) are credit items; payments (outflow) are debit items.
b) Read "incorrect statement" carefully - it is a common trap in such questions.

11. "The Government had launched Incredible India Campaign to promote tourism in various parts of the country."
Elaborate the impact of this campaign on foreign exchange reserves and Balance of Payment of India. [3 Marks]

Answer:
1. The Incredible India Campaign attracts more foreign tourists, so the tourism industry brings a large inflow of foreign exchange into India.
2. Spending by foreign tourists is an export of services, so this inflow is recorded on the credit side of the current account of the Balance of Payment (BoP).
3. As a result, the foreign exchange reserves of India increase and the BoP position of the country improves.

Teacher's Note:
a) Keywords: inflow of foreign exchange, credit side, current account, rise in reserves.
b) Tourism is a service export, so it is a current account item, not a capital account item.
c) This answer is marked as a whole, so link the campaign to both reserves and BoP.

12. (a) "Saksham owns a manufacturing facility where microchips are utilized in the production of electronic devices, including computers and smartphones."
From the above text, identify whether the given statement refers to an intermediate goods or final goods. Give valid reason in support of your answer. [3 Marks]

Answer:
1. The microchips used by Saksham in his manufacturing facility are intermediate goods.
2. Reason: They are completely used up in the further production of electronic devices (computers and smartphones) during the same year.
3. They have not yet crossed the production boundary and are not bought for final use, so they are intermediate goods.

Teacher's Note:
a) 1 mark is for the correct identification and 2 marks are for the reason.
b) Use the keywords "used up in further production" and "production boundary".
c) The nature of a good depends on its end use, not on the good itself.

OR

(b) Calculate the value of Net Value Added at Factor Cost (NVA_FC) :
S. No. | Particulars | Amount (In Rs. crore)
(i) | Operating Surplus | 3,740
(ii) | Increase in unsold stock | 600
(iii) | Sales | 10,625
(iv) | Purchase of raw materials | 2,625
(v) | Consumption of fixed capital | 500
(vi) | Subsidies | 400
(vii) | Indirect taxes | 1,200 [3 Marks]

Answer:
1. \( NVA_{FC} = \) Sales + Increase in unsold stock - Purchase of raw materials - Consumption of fixed capital - (Indirect taxes - Subsidies)
2. \( NVA_{FC} = 10,625 + 600 - 2,625 - 500 - (1,200 - 400) \)
3. \( NVA_{FC} = 11,225 - 2,625 - 500 - 800 \)
4. \( NVA_{FC} = \) Rs. 7,300 crore

Teacher's Note:
a) Operating surplus is not used in the value added method; it is a distractor.
b) Value of output = Sales + Change in stock; then subtract intermediate consumption, depreciation and net indirect taxes.
c) Net indirect taxes = Indirect taxes - Subsidies = Rs. 800 crore.

13. "A significant proportion of subsidies on fertilizer was a key component of the fiscal statement of the Central Government for year 2023-24."
Identify the nature of government expenditure and its objective. [4 Marks]

Answer:
1. Subsidy on fertilizer is a revenue expenditure of the government.
2. Revenue expenditure is the expenditure that neither creates any asset nor reduces any liability of the government.
3. The objective shown here is the allocation function of the government budget (allocation of resources).
4. By giving large subsidies on fertilizer, the government seeks to raise agricultural output and achieve socio-economic goals, which supports the overall growth of a country like India.

Teacher's Note:
a) Two things are asked: nature (revenue expenditure) and objective (allocation function) - answer both.
b) Always give the definition of revenue expenditure to justify the identification.
c) Subsidies do not create assets, so never call them capital expenditure.

14. (a) In an economy ; \( C = 200 + 0.75\,Y \) (where C is consumption expenditure and Y is National Income). Investment expenditure is Rs. 4,000 Crore.
Calculate the following :
(i) Equilibrium level of income.
(ii) Total consumption expenditure at equilibrium income level. [4 Marks]

Answer:
Given: \( C = 200 + 0.75\,Y \) and Investment \( I = \) Rs. 4,000 crore
(i) At equilibrium, \( Y = C + I \)
\( Y = 200 + 0.75\,Y + 4,000 \)
\( Y - 0.75\,Y = 4,200 \)
\( 0.25\,Y = 4,200 \)
\( Y = \frac{4,200}{0.25} = \) Rs. 16,800 crore
(ii) Consumption at equilibrium, \( C = 200 + 0.75\,Y \)
\( C = 200 + 0.75 \times 16,800 = 200 + 12,600 \)
\( C = \) Rs. 12,800 crore

Teacher's Note:
a) Write the equilibrium condition \( Y = C + I \) first; it carries marks.
b) Check: \( C + I = 12,800 + 4,000 = 16,800 = Y \).
c) Also, multiplier \( = \frac{1}{1 - 0.75} = 4 \) and \( 4 \times 4,200 = 16,800 \) gives the same result.

OR

(b) Explain the adjustment mechanism in case ex-ante savings are greater than ex-ante investments. [4 Marks]

Answer:
1. When ex-ante savings are greater than ex-ante investments, households are planning to consume less than what the firms expected them to consume.
2. So aggregate demand falls short of aggregate supply, and there is an unintended (unplanned) accumulation of inventories with the firms.
3. To bring inventories back to the desired level, producers reduce production, so output, income and employment fall.
4. As income falls, savings also fall; this process continues till ex-ante savings become equal to ex-ante investments and equilibrium is restored.

Teacher's Note:
a) Key chain: S greater than I - unplanned rise in inventory - cut in production - fall in income - equilibrium.
b) Mention "unintended accumulation of inventories"; it is the main value point.

15. Suppose in an economy, primary deposits are Rs. 500, if the Reserve Ratio is 25%. Estimate the total deposits created and the total lending by the banking system. [4 Marks]

Answer:
Given: Primary deposits = Rs. 500; Reserve Ratio (RR) = 25% = 0.25
Total deposits \( = \) Primary deposits \( \times \frac{1}{RR} \)
\( = 500 \times \frac{1}{0.25} = 500 \times 4 \)
\( = \) Rs. 2,000
Total lending \( = \) Total deposits \( - \) Primary deposits
\( = 2,000 - 500 \)
\( = \) Rs. 1,500

Teacher's Note:
a) Money multiplier \( = \frac{1}{RR} = \frac{1}{0.25} = 4 \).
b) Write both formulas; each carries marks along with the correct final value.
c) Do not confuse total lending with total deposits - lending excludes the primary deposit.

16. Read the following text carefully :

Union Food and Consumer Affairs Minister said that the Central Government has taken many proactive steps in the past few years to control retail prices of food items. He said that the government aims to keep inflation under control without compromising the country's economic growth. Retail inflation inched up to a three-month high of 5.55% in November 2023 driven by higher food prices. Inflation has been declining since August 2023, when it touched 6.83%. 140 new price monitoring centres had been set up by the Central Government to keep a close watch on wholesale and retail prices of essential commodities.
The Government has banned the export of many food items like wheat, broken rice, non-basmati white rice, onions etc. It has also reduced import duties on edible oils and pulses to boost domestic supply and control price rise.
On the basis of the given text and common understanding, answer the following questions :

(a) Mention the number of new price monitoring centres set up by government. [1 Mark]

Answer: The Central Government has set up 140 new price monitoring centres.

Teacher's Note:
a) This is a direct fact from the text; read the passage carefully.
b) These centres watch wholesale and retail prices of essential commodities.

(b) State any two proactive measures taken by government to boost domestic supply and reduction in prices. [2 Marks]

Answer:
1. Ban on the export of many food items like wheat, broken rice, non-basmati white rice and onions.
2. Reduction in import duties on edible oils and pulses.

Teacher's Note:
a) Both measures raise domestic supply, which helps to bring prices down.
b) Give exactly two measures, one mark each.

(c) Explain any one monetary measure used to control inflation. [3 Marks]

Answer:
1. To control inflation, the Central Bank (RBI) may increase the repo rate.
2. A higher repo rate forces commercial banks to raise their lending rates, so credit becomes costlier.
3. This discourages borrowing by the general public, which leads to a fall in aggregate demand and so controls inflation.

Teacher's Note:
a) Other valid measures (raising bank rate, CRR or SLR, or selling securities in open market operations) are also accepted.
b) Show the full chain: measure - cost of credit - borrowing - aggregate demand - prices.
c) Fiscal measures like taxes are not monetary measures; do not mix them.

17. (a) (i) Explain any two precautions to be adopted while estimating National income by Income method. [3 Marks]

Answer:
1. Transfer incomes (like old age pension or scholarships) should not be included, as they are unilateral payments received without any productive service.
2. Income from the sale of second-hand goods should not be included, as it does not add to the flow of goods and services in the economy in the current year.

Teacher's Note:
a) Each precaution carries 1.5 marks, so give a reason with each one.
b) Other valid precautions: include income from self-consumed output and imputed rent of owner-occupied houses; exclude windfall gains.

(ii) "Higher Gross Domestic Product (GDP) always means higher per capita availability of goods in the economy."
Defend or refute the given statement as the index of welfare of the people of that country. [3 Marks]

Answer:
1. The given statement is refuted.
2. A rise in GDP may not affect the welfare of all sections of society in the same way, because the increased income may be concentrated in a few hands.
3. For the rest of the people, income (and so per capita availability of goods) may even fall. Hence the welfare of the whole economy may not increase despite a rise in GDP.

Teacher's Note:
a) Start with a clear stand ("refuted"), then explain using distribution of income.
b) Other limitations of GDP as a welfare index are externalities and non-monetary exchanges.

OR

(b) (i) Distinguish between factor income and transfer income with suitable examples. [3 Marks]

Answer:
1. Factor income is the income earned by factors of production for rendering their services to production units. Example: salary received by an employee.
2. Transfer income is a unilateral income received without rendering any productive service in return. Example: scholarship received by a student.

Teacher's Note:
a) Marks are 1 for each meaning and half for each example.
b) Factor income is included in national income; transfer income is not.

(ii) Explain the components of 'Profit' as per Income Method of estimating National Income (NNP_FC). [3 Marks]

Answer:
1. Corporate Tax: tax imposed by the government on the income (profits) of companies.
2. Undistributed Profits (retained earnings): the part of profit earned by private and government-owned firms that is kept back and not distributed.
3. Dividend: the part of profit distributed among the shareholders (owners of capital).

Teacher's Note:
a) Profit = Corporate tax + Dividend + Undistributed profit; one mark for each component.
b) Write a one-line meaning with each component, not just the names.

SECTION B (Indian Economic Development)

18. India is NOT a member of which of the following regional/global economic grouping ? [1 Mark]
(A) BRICS
(B) SAARC
(C) G-20
(D) G-7

Answer: (D) G-7

Teacher's Note:
a) India is a member of BRICS, SAARC and G-20.
b) G-7 is a group of seven advanced economies; India is only invited as a guest at times.

19. Read the following statements carefully : Assertion (A) and Reason (R). Choose the correct option from those given below : [1 Mark]
Assertion (A) : Human capital formation increases the rate of participation of population to economic activities and leads to economic growth.
Reason (R) : Rate of participation of people refers to the percentage of people engaged in production process of a country.
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

Answer: (B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

Teacher's Note:
a) The Reason only defines the participation rate; it does not explain how human capital raises growth.
b) When the Reason is just a definition, option (B) is usually correct.

20. From the following terms given in Column-I, match the correct pair of meaning given in Column-II : [1 Mark]
Column-I | Column-II
(a) Human Development Indicator | (i) Rule of Law
(b) Demographic Indicator | (ii) Constitutional Protection
(c) Special Economic Zone | (iii) Generation of additional economic activities
(d) Commune System | (iv) Collective industrialisation
(A) (a) - (i)
(B) (b) - (ii)
(C) (c) - (iii)
(D) (d) - (iv)

Answer: (C) (c) - (iii)

Teacher's Note:
a) Special Economic Zones are set up to attract investment and generate additional economic activities.
b) The commune system in China was mainly about collective farming, not collective industrialisation.

21. Study the following image carefully : [1 Mark]
Identify, the trade practice that has successfully replaced foreign goods with domestic production.
(A) Export Promotion
(B) Export Substitution
(C) Import Proliferation
(D) Import Substitution

[Figure: A cartoon in which a large hand labelled "GOVT." pulls back a chain hooked onto a sleek car labelled "IMPORTS", holding it back on the road, while a small car labelled "EXPORTS" is in front of it.]

Answer: (D) Import Substitution

Teacher's Note:
a) Import substitution means producing at home the goods that were earlier imported.
b) The government holding back imports in the cartoon shows protection of domestic industry.

For Visually Impaired Candidates (in lieu of Q. 21)

21. _________ refers to a trade policy aimed at reducing reliance on imported goods by encouraging domestic production. [1 Mark]
(A) Export Promotion
(B) Export Substitution
(C) Import Substitution
(D) Import Proliferation

Answer: (C) Import Substitution

Teacher's Note:
a) India followed import substitution as an inward-looking trade strategy in its early five year plans.
b) It was carried out through tariffs and quotas on imports.

22. Read the following statements carefully : Assertion (A) and Reason (R). Choose the correct option from those given below : [1 Mark]
Assertion (A) : Prior to economic reforms, public investment in social infrastructure by China resulted in better Human Development Indicators (HDI).
Reason (R) : China is ahead of India and Pakistan on many Human Development Indicators (HDI).
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.

Answer: (B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

Teacher's Note:
a) China's early investment in education and health improved its HDI before the 1978 reforms.
b) The Reason states a fact about present ranking; it does not explain the Assertion.

23. "It is short-term unemployment occurring, as people transit between jobs."
On the basis of given definition, identify the type of unemployment indicated. (Choose the correct option) [1 Mark]
(A) Disguised Unemployment
(B) Seasonal Unemployment
(C) Open Unemployment
(D) Frictional Unemployment

Answer: (D) Frictional Unemployment

Teacher's Note:
a) Frictional unemployment is temporary and happens while people change jobs.
b) Seasonal unemployment is linked to seasons, like in agriculture - do not confuse the two.

24. From the terms given below in Column-I and Column-II, choose the correct pair of statements : [1 Mark]
Column-I | Column-II
(i) Subsidies | (a) Maximum quantity of goods that can be imported
(ii) Land ceiling | (b) Element of IPR 1956
(iii) Small Scale Industries | (c) Land to the tiller
(iv) Modernisation as a goal of five year plan | (d) Change in social outlook
(A) (i) - (a)
(B) (ii) - (b)
(C) (iii) - (c)
(D) (iv) - (d)

Answer: (D) (iv) - (d)

Teacher's Note:
a) Modernisation as a planning goal meant new technology and a change in social outlook, such as equal rights for women.
b) Maximum quantity of imports is a quota and "land to the tiller" relates to abolition of intermediaries, not land ceiling.

25. Read the following statements carefully : [1 Mark]
Statement-1 : Hired workers may be regular salaried workers or casual workers.
Statement-2 : Regular salaried employment is a major source of employment in rural areas in India.
In the light of the given statements, choose the correct option from the following :
(A) Statement 1 is true and Statement 2 is false.
(B) Statement 1 is false and Statement 2 is true.
(C) Both Statements 1 and 2 are true.
(D) Both Statements 1 and 2 are false.

Answer: (A) Statement 1 is true and Statement 2 is false.

Teacher's Note:
a) In rural areas, self-employment and casual wage work are the main sources of employment.
b) Regular salaried jobs are found more in urban areas.

26. _______ sector was the primary focus of the Great Leap Forward in China. (Fill up the blank with correct option) [1 Mark]
(A) Tax
(B) Industrial
(C) Financial
(D) Educational

Answer: (B) Industrial

Teacher's Note:
a) The Great Leap Forward (1958) aimed at rapid industrialisation on a massive scale.
b) People were even encouraged to set up industries in their backyards.

27. Study the following picture : [1 Mark]
Identify and select, the recent phenomenon in which demand for resources surpasses their supply.
(A) Economic growth
(B) Environmental crisis
(C) Technological advancement
(D) Cultural evolution

[Figure: A picture of a crowded industrial city with many factory chimneys releasing thick smoke into the sky, tall buildings in the background and a river flowing through the polluted city.]

Answer: (B) Environmental crisis

Teacher's Note:
a) When demand for environmental resources is more than their rate of regeneration, it leads to an environmental crisis.
b) Smoke and pollution in the picture are signs of this crisis.

For Visually Impaired Candidates (in lieu of Q. 27)

27. Identify, which of the following is NOT one of the strategies for Sustainable Development. [1 Mark]
(A) Use of non-conventional sources of energy
(B) Use of fossil fuel for transportation
(C) Use of traditional knowledge
(D) Use of organic compost manure

Answer: (B) Use of fossil fuel for transportation

Teacher's Note:
a) Fossil fuels are non-renewable and cause pollution, so they go against sustainable development.
b) Sustainable strategies include CNG in transport, solar and wind energy, and bio-composting.

28. (a) "Cooperatives have received a setback during the recent past."
Justify the given statement with valid explanation. [3 Marks]

Answer:
Cooperative marketing has helped farmers to get fair prices for their produce. However, in recent times cooperatives have received a setback due to:
1. Inadequate coverage of farmer members.
2. Lack of proper link between marketing and processing cooperatives.
3. Inefficient financial management.

Teacher's Note:
a) Begin with the role of cooperatives, then explain why they have weakened.
b) This answer is marked as a whole, so all three problems should be given.

OR

(b) Explain the reasons behind less number of regular salaried employees in rural areas as compared to urban areas. [3 Marks]

Answer:
1. Most of the rural workforce is engaged directly or indirectly in their own farms and allied activities, so they are self-employed.
2. Regular salaried jobs need skills and formal qualifications, which are generally not available to the rural population.
3. Hence, in rural areas people mostly depend on self-employment and casual work, while regular salaried jobs are concentrated in urban areas.

Teacher's Note:
a) Keywords: dependence on farming, lack of skills and qualifications.
b) Contrast rural and urban clearly, as the question asks for a comparison.

29. Trace the relationship between human capital and economic growth. [3 Marks]

Answer:
1. Human capital and economic growth are positively related. Human capital is the stock of knowledge and skills of the population of a nation.
2. Investment in human capital (education, health, training) improves the efficiency and abilities of workers, which raises productivity and output.
3. Human capital also encourages innovation and increases the capacity to adopt new technologies, which leads to economic growth.

Teacher's Note:
a) State the positive relationship first; it is the core value point.
b) Use keywords: productivity, innovation, absorption of new technology.
c) Growth in turn provides more resources for education and health, so the relation works both ways.

30. Describe the path of developmental initiatives taken by Pakistan for its economic development. [4 Marks]

Answer:
1. Pakistan adopted a mixed economy model in which public and private sectors co-exist.
2. It introduced regulated policy frameworks for import substitution based industrialisation.
3. The Green Revolution led to mechanisation of agriculture, and higher public investment in infrastructure changed the agrarian structure greatly.
4. Pakistan nationalised its capital goods industries, and later started economic reforms to encourage privatisation.

Teacher's Note:
a) Present the steps in order: mixed economy, import substitution, Green Revolution, nationalisation, then reforms.
b) Keywords examiners look for: mixed economy, import substitution, mechanisation, privatisation.

31. (a) "In the mountainous regions, mini-hydel plants prove to be cost effective as well as eco-friendly."
Justify above statement with valid arguments. [3 Marks]

Answer:
1. In mountainous regions most streams are perennial. Mini-hydel plants use the energy of these streams to move small turbines and generate electricity that is used locally.
2. They are eco-friendly because they do not change the land use pattern of the area.
3. They are cost effective because they remove the need for large transmission towers and cables, and so avoid transmission losses.

Teacher's Note:
a) Cover both parts of the statement - eco-friendly and cost effective.
b) Keywords: perennial streams, local use, no change in land use, no transmission loss.

(b) Define Absorptive capacity. [1 Mark]

Answer: Absorptive capacity means the ability of the environment to absorb degradation.

Teacher's Note:
a) When degradation exceeds the absorptive capacity, an environmental crisis results.
b) Keep the definition short and exact.

32. (a) Describe briefly a rationale behind choosing 'Self-reliance' as a planning objective for the Indian economy. [4 Marks]

Answer:
1. Self-reliance means avoiding imports of goods that can be produced within the country.
2. To reduce India's dependence on foreign nations, stress was laid on mobilising domestic resources.
3. It was feared that dependence on imported food supplies, foreign technology and foreign capital might increase foreign interference in India's policies.
4. Hence self-reliance was adopted to protect the sovereignty of the newly independent country.

Teacher's Note:
a) Keywords: dependence on foreign nations, domestic resources, foreign interference.
b) Link the objective to India's recent colonial past for a stronger answer.

OR

(b) Explain how, Goods and Services Tax (GST) has simplified the multiplicity of taxes on goods and services. [4 Marks]

Answer:
1. GST is a single comprehensive indirect tax on goods and services.
2. Under GST, tax is imposed on the basis of value addition at each stage of the movement of goods and services.
3. It has replaced a large number of indirect taxes that were earlier levied on production or sale of goods and provision of services.
4. Thus GST ensures uniformity, reduces tax burden, prevents the cascading effect (tax on tax) and improves ease of doing business across the country.

Teacher's Note:
a) Keywords: single indirect tax, value addition, replaced many taxes, no cascading effect.
b) GST follows the idea of "One Nation, One Tax".

33. Read the following text carefully :

Agro-startups and rural enterprises are becoming increasingly vital for rural development in India. They address the critical challenges faced by rural sector in India. These ventures bring in technological innovations such as precision farming, IT-based monitoring system and data-driven decision making tools that enhance productivity and resource efficiency.
By streamlining supply chains and creating direct market linkages, they ensure better pricing for farmers and reduce dependency on traditional intermediaries. Such enterprises contribute actively to employment generation in the rural areas. The government has demonstrated a continuous policy and financial support for agri-startups and entrepreneurs through various programs like RKVY-RAFTAAR, the Agri-infrastructure fund and Agri-SURE.
On the basis of given text and common understanding, answer the following questions :

(a) Explain, how agro-startups address the critical challenges faced by the agricultural sector. [4 Marks]

Answer:
1. Agro-startups bring technological innovations such as precision farming, IT-based monitoring systems and data-driven decision making tools.
2. These technologies raise farm productivity and make better use of resources.
3. They streamline supply chains and create direct market linkages for farmers.
4. This ensures better prices for farmers, reduces dependence on traditional intermediaries and also generates employment in rural areas.

Teacher's Note:
a) Two main value points: technical innovation and better market linkages leading to better pricing.
b) Use examples from the passage to support each point.

(b) Comment on the role of government in supporting agro-startups and entrepreneurs in India. [2 Marks]

Answer:
1. The government has given continuous policy and financial support to agri-startups and entrepreneurs.
2. This support is given through programs like RKVY-RAFTAAR, the Agri-infrastructure fund and Agri-SURE.

Teacher's Note:
a) Mention both types of support - policy and financial.
b) Naming the programs from the text adds weight to the answer.

34. (a) Giving valid reasons, state whether the following statements are true or false. [6 Marks]

(i) There was growth in agricultural sector due to expansion of aggregate area under cultivation, during the colonial era. [2 Marks]

Answer:
1. True.
2. Though agricultural productivity declined during the colonial period, the sector showed some growth in absolute terms because the total area under cultivation expanded.

Teacher's Note:
a) Separate growth in output (due to more area) from productivity (which fell).
b) No marks are given for "True" alone without the reason.

(ii) The objective of World Trade Organisation (WTO) is to establish a rule based regime, in the world trade. [2 Marks]

Answer:
1. True.
2. The WTO aims to set up a rule-based trading regime in which nations cannot put arbitrary restrictions on trade, so that world resources are used optimally and the environment is protected.

Teacher's Note:
a) Keyword: no arbitrary restrictions on trade.
b) The WTO was set up in 1995 as the successor to GATT.

(iii) Economic growth with regional disparity was the main goal of planning in India. [2 Marks]

Answer:
1. False.
2. The main goal of planning in India was economic growth with regional equality. The aim was to promote industries in backward regions to reduce regional disparities.

Teacher's Note:
a) Spot the changed word ("disparity" instead of "equality") that makes the statement false.
b) Support your answer with the policy of developing industries in backward areas.

OR

(b) (i) Distinguish between :
(1) Tariff and non-tariff barriers
(2) Bilateral and multilateral trade [3 Marks]

Answer:
1. Tariff barriers are restrictions on imports imposed by a government in the form of taxes (duties). Non-tariff barriers are restrictions on imports other than taxes, mainly limits on the quantity (quotas) and quality of imported goods.
2. Bilateral trade is the exchange of goods or services between two countries. Multilateral trade is trade by a country with more than two nations.

Teacher's Note:
a) Each distinction carries 1.5 marks; define both terms in each pair.
b) Use the word "whereas" to show the contrast clearly.

(ii) "Small-Scale Industries require a shield against large scale industries."
In the light of given statement, elaborate the steps initiated by the government in this direction. [3 Marks]

Answer:
1. Small-scale industries (SSIs) cannot compete with large firms, so the government protected them.
2. The production of several products was reserved only for SSIs, depending on their ability to manufacture these goods.
3. SSIs were given concessions such as lower excise duty and bank loans at lower interest rates.

Teacher's Note:
a) Two key steps: reservation of products and concessions (lower excise duty, cheaper loans).
b) This answer is marked as a whole, so explain each step briefly.

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