CBSE Class 12 Economics Question Paper 2025 Solved Code 58-1-3

SECTION A (Macro Economics)

1. 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]
Options:
(A) 100
(B) 200
(C) 500
(D) 800

Answer: (D) 800

Teacher's Note:
a) Consumption \( = APC \times Y = 0.8 \times 4,000 = 3,200 \), so Saving \( = 4,000 - 3,200 = 800 \).
b) Quick check: \( APS = 1 - APC = 0.2 \), and \( 0.2 \times 4,000 = 800 \).

2. 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]
Options:
(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 \( MPS = 0.2 \) and \( K = \frac{1}{MPS} = \frac{1}{0.2} = 5 \).
b) The negative intercept (autonomous dissaving) does not affect the multiplier; only MPS matters.

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.
Options:
(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 owed back to depositors, so they are liabilities of commercial banks.
b) Commercial banks do not accept deposits on behalf of the RBI, so statement (IV) is wrong.

4. 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) Exports are greater than imports, so the balance of trade is in surplus.

5. 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
Options:
(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 the amount left for others.
b) GST is an indirect tax and borrowings are a capital receipt, so pairs (a), (b) and (c) are wrong.

6. 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) In managed floating, the market sets the rate but the central bank steps in when needed.
b) Because it mixes features of fixed and flexible systems, it is called a hybrid system.

7. 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
Options:
(A) (a) - (i)
(B) (b) - (ii)
(C) (c) - (iii)
(D) (d) - (iv)

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

Teacher's Note:
a) Profit is the reward for entrepreneurship.
b) Rent free accommodation is compensation of employees, and interest is income from property.

8. 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.
Options:
(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.

9. In the context of Current Account transactions of Balance of Payment, identify the incorrect statement from the following: (Choose the correct option) [1 Mark]
Options:
(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 bring foreign exchange into the country, so they are credit items, not debit items.
b) Rule to remember: inflow of foreign exchange = credit; outflow = debit.

10. "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]
Options:
(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 helps settle payments to be made in the future, such as repaying a loan in instalments.
b) The keyword "repaying over ten years" points to deferred (future) payments.

11. (a) Calculate the value of Net Value Added at Factor Cost (NVA_FC): [3 Marks]
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

Answer:
1. NVA_FC = Sales + Increase in unsold stock - Purchase of raw materials - Consumption of fixed capital - (Indirect taxes - Subsidies)
2. NVA_FC = (iii) + (ii) - (iv) - (v) - [(vii) - (vi)]
3. \( = 10,625 + 600 - 2,625 - 500 - (1,200 - 400) \)
4. \( = 11,225 - 2,625 - 500 - 800 \)
5. NVA_FC = Rs. 7,300 crore

Teacher's Note:
a) Operating surplus is not used in the value added method; it is an extra item to test you.
b) Increase in unsold stock is added because it is part of the value of output.
c) Subtract net indirect taxes (Indirect taxes - Subsidies) to move from market price to factor cost.

OR

(b) Distinguish between Net Factor Income from Abroad (NFIA) and Net Exports (X - M). [3 Marks]

Answer:
1. Net Factor Income from Abroad (NFIA) is the difference between factor income received from the rest of the world and factor income paid to the rest of the world.
2. Net Exports (X - M) is the difference between the value of exports of goods and services and the value of imports of goods and services.
3. Thus, NFIA deals with factor incomes (wages, rent, interest, profit), while net exports deal with the flow of goods and services.

Teacher's Note:
a) Write both definitions with the word "whereas" to show a clear distinction.
b) Do not confuse factor income (rewards of factors) with the value of goods and services traded.

12. "All consumption goods are durable in nature."
Defend or refute the given statement with the help of a suitable example. [3 Marks]

Answer:
1. The given statement is refuted.
2. Consumption goods can be durable or non-durable. Non-durable consumption goods, such as food, have a short lifespan.
3. Durable consumption goods, such as cars and home appliances, can be used for a long period, usually more than one year. Hence, not all consumption goods are durable in nature.

Teacher's Note:
a) Start by clearly writing "refuted"; the verdict carries weight in this answer.
b) Give one example each of durable and non-durable consumption goods.

13. "In the recent Budget the Government allocated funds for construction of new metro lines in smart cities to improve public transportation and reduce pollution."
Identify the nature of government expenditure & its objective. [4 Marks]

Answer:
1. Nature: It is Capital Expenditure, because it leads to the creation of assets (metro lines) for the government.
2. Objective: The indicated objective of the government budget is the 'Allocation Function'.
3. By allocating funds for new metro lines in smart cities, the government aims to improve public transport and infrastructure, reduce environmental pollution and promote sustainable urban development.
4. This contributes to overall economic growth and social welfare.

Teacher's Note:
a) Two keywords are needed: "capital expenditure" and "allocation function".
b) Justify capital expenditure by saying it creates assets for the government.

14. 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 = 25% = 0.25
1. Total deposits \( = \text{Primary deposits} \times \frac{1}{\text{Reserve Ratio}} \)
2. \( = 500 \times \frac{1}{0.25} = 500 \times 4 \)
3. Total deposits = Rs. 2,000
4. Total lending = Total deposits - Primary deposits
5. \( = 2,000 - 500 \)
6. Total lending = Rs. 1,500

Teacher's Note:
a) The money multiplier is \( \frac{1}{RR} = \frac{1}{0.25} = 4 \).
b) Write the formula first; formula, substitution and final value each carry marks.
c) Total lending is the deposits created beyond the primary deposit, so subtract Rs. 500.

15. (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: \( C = 200 + 0.75Y \); Investment (I) = Rs. 4,000 crore
(i) At equilibrium level of income, \( Y = C + I \)
\( Y = 200 + 0.75Y + 4,000 \)
\( Y - 0.75Y = 4,200 \)
\( 0.25Y = 4,200 \)
\( Y = \frac{4,200}{0.25} \) = Rs. 16,800 crore
(ii) Consumption expenditure at equilibrium \( = 200 + 0.75Y \)
\( = 200 + 0.75 \times 16,800 = 200 + 12,600 \)
= Rs. 12,800 crore

Teacher's Note:
a) Always start from the equilibrium condition \( Y = C + I \).
b) Check: \( S = Y - C = 16,800 - 12,800 = 4,000 = I \), so the answer is correct.

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. As a result, goods remain unsold and there is an unintended accumulation of inventories.
3. To bring inventories back to the desired level, producers decrease production in the economy.
4. Output, income and savings keep falling until ex-ante savings become equal to ex-ante investments and equilibrium is restored.

Teacher's Note:
a) Key terms: "unintended accumulation of inventories" and "fall in production".
b) Present the steps in a clear chain: S greater than I, then stock piles up, then output falls, then equilibrium.

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: 140 new price monitoring centres had been set up by the Central Government.

Teacher's Note:
a) This is a direct fact from the passage; read the text carefully.
b) Write the number in a full sentence.

(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 are given in the second paragraph of the passage.
b) Each measure carries 1 mark, so write them as two separate points.

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

Answer:
1. To control inflation, the Central Bank may increase the repo rate.
2. A higher repo rate forces commercial banks to raise their lending rates, making credit costlier.
3. This discourages borrowing by the general public, which reduces Aggregate Demand and controls inflation in the economy.

Teacher's Note:
a) Any other valid monetary measure (for example, raising CRR or open market sale of securities) is also accepted.
b) Show the full chain: repo rate up, cost of credit up, borrowing down, AD down, prices down.

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

Answer:
1. Value of intermediate goods should not be included, as it leads to the problem of double counting.
2. Sale and purchase 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 must be written with its reason to get full marks.
b) Any other valid precaution, such as including the imputed value of production for self-consumption, is also accepted.

(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 increase may be concentrated in a few hands.
3. For the rest of the people, income may even fall, so per capita availability of goods may not rise. In such a case, the welfare of the economy may not increase despite a rise in GDP.

Teacher's Note:
a) The key point is unequal distribution of GDP.
b) Clearly state "refuted" before giving the reason.

OR

(b) (i) Distinguish between Stock and flow variables, using suitable examples. [3 Marks]

Answer:
1. Stock variables are measured at a particular point of time. Example: National Wealth.
2. Flow variables are measured over a period of time. Example: National Income.
3. Thus, a stock has no time dimension (it is a quantity at a moment), whereas a flow has a time dimension, such as per year.

Teacher's Note:
a) Remember: stock has no time dimension; flow has a time dimension (per year, per month).
b) Give one example each; other valid examples like capital (stock) and investment (flow) are accepted.

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

Answer:
1. Corporate Tax: Tax imposed on the income earned by corporations (private sector firms).
2. Undistributed Profits: Part of the profit earned by private and government-owned firms which is not distributed among the factors of production (retained earnings).
3. Dividend: The part of profit which is distributed among the shareholders (owners of capital).

Teacher's Note:
a) Profit = Corporate Tax + Dividend + Undistributed Profits.
b) Each component needs a short explanation, not just its name.

SECTION B (Indian Economic Development)

18. "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]
Options:
(A) Disguised Unemployment
(B) Seasonal Unemployment
(C) Open Unemployment
(D) Frictional Unemployment

Answer: (D) Frictional Unemployment

Teacher's Note:
a) Frictional unemployment is the temporary gap when a person leaves one job and searches for another.
b) Seasonal unemployment depends on seasons, not on changing jobs.

19. 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).
Options:
(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) Both statements are facts, but the Reason only states China's position; it does not explain why its HDI improved.
b) Ask "does R tell us why A happened?" before choosing option (A).

20. Study the following image carefully: [1 Mark]

[Figure: Cartoon showing a hand labelled "GOVT." pulling back, with a chain and hook, a car labelled "IMPORTS", while a car labelled "EXPORTS" moves ahead on the road.]

Identify, the trade practice that has successfully replaced foreign goods with domestic production.
Options:
(A) Export Promotion
(B) Export Substitution
(C) Import Proliferation
(D) Import Substitution

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. 20)

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

Answer: (C) Import Substitution

Teacher's Note:
a) Import substitution was an inward-looking trade strategy used in India's early five year plans.
b) Note that the option order here is different from the main Q. 20.

21. 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
Options:
(A) (a) - (i)
(B) (b) - (ii)
(C) (c) - (iii)
(D) (d) - (iv)

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

Teacher's Note:
a) Special Economic Zones were set up to attract investment and generate additional economic activities.
b) The commune system in China was linked to collective cultivation of land, not collective industrialisation.

22. 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.
Options:
(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 it.
b) A definition is rarely the correct explanation of a cause-and-effect assertion.

23. 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.

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

Answer: (B) Industrial

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

25. Study the following picture: [1 Mark]

[Figure: Picture of a city skyline with many factory chimneys releasing thick smoke into the sky, and a polluted river flowing past crowded settlements in the foreground.]

Identify and select, the recent phenomenon in which demand for resources surpasses their supply.
Options:
(A) Economic growth
(B) Environmental crisis
(C) Technological advancement
(D) Cultural evolution

Answer: (B) Environmental crisis

Teacher's Note:
a) When demand for environmental resources exceeds their supply, the environment faces a crisis.
b) Smoke and polluted water in the picture are signs of pollution and resource overuse.

For Visually Impaired Candidates (in lieu of Q. 25)

25. Identify, which of the following is NOT one of the strategies for Sustainable Development. [1 Mark]
Options:
(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 pollute the air, so they do not support sustainable development.
b) Cleaner fuels like CNG are a sustainable strategy for transport.

26. 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 is the major source of employment, not regular salaried jobs.
b) Regular salaried employment is found more in urban areas.

27. 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
Options:
(A) (i) - (a)
(B) (ii) - (b)
(C) (iii) - (c)
(D) (iv) - (d)

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

Teacher's Note:
a) Modernisation includes both 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.

28. Distinguish between Physical Capital and Human Capital. [3 Marks]

Answer:
1. Physical capital refers to tangible assets like plant, machinery and buildings, whereas human capital is the stock of knowledge, skill and ability of people.
2. Physical capital is separable from its owner, whereas human capital is inseparable from its owner.
3. Physical capital can be sold in the market, whereas human capital cannot be sold; only its services can be sold.

Teacher's Note:
a) Use "whereas" in each point to make the difference clear.
b) Key words: tangible vs intangible, separable vs inseparable, sold vs only services sold.

29. (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 get fair prices for their produce. However, in recent times cooperatives have faced a setback due to:
1. Inadequate coverage of farmer members.
2. Insufficient link between marketing and processing cooperatives.
3. Inefficient financial management.

Teacher's Note:
a) Begin with the positive role of cooperatives, then state the reasons for the setback.
b) Three clear reasons are expected for 3 marks.

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 its own farms and other allied activities, so they are self-employed.
2. Regular salaried jobs require skills and qualifications, which are generally not accessible to the rural population.
3. Hence, rural areas have fewer regular salaried employees than urban areas.

Teacher's Note:
a) Link rural work to self-employment on farms.
b) Mention lack of education and skills as the second key reason.

30. (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 dependence on foreign nations, the policy makers stressed mobilising domestic resources.
3. It was feared that dependence on imported food supplies, foreign technology and foreign capital might increase foreign interference in our policies.
4. Hence, self-reliance was adopted to protect India's sovereignty and build its own productive base.

Teacher's Note:
a) The key point is the fear of foreign interference in India's policies.
b) Mention imported food, foreign technology and foreign capital by name.

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.
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 and sale of goods or provision of services.
4. Thus, GST ensures uniformity, reduces the tax burden, prevents cascading effects and improves ease of doing business across the country.

Teacher's Note:
a) Keywords: "single comprehensive indirect tax", "value addition" and "cascading effect".
b) Mention that many indirect taxes were replaced by one tax.

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 such streams to move small turbines, which generate electricity for local use.
2. They are eco-friendly because they do not change the land use pattern.
3. They remove the need for large-scale transmission towers and cables, which avoids transmission losses and makes them cost effective.

Teacher's Note:
a) Give separate reasons for "eco-friendly" and "cost effective".
b) The phrase "no transmission loss" is a key value point.

(b) Define Carrying Capacity. [1 Mark]

Answer: Carrying capacity means that the rate of resource extraction should remain below the rate of regeneration of the resource, and the generation of waste should remain within the absorptive capacity of the environment.

Teacher's Note:
a) Both parts, extraction below regeneration and waste within absorptive capacity, must be written.
b) If carrying capacity is exceeded, the environment faces a crisis.

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

Answer:
1. Pakistan adopted a mixed economy model with the co-existence of public and private sectors, and introduced regulated policies for import substitution-based industrialisation.
2. The Green Revolution led to mechanisation of agriculture.
3. An increase in public investment in infrastructure changed the agrarian structure greatly, and Pakistan nationalised its capital goods industries.
4. Later, economic reforms were started to encourage privatisation.

Teacher's Note:
a) Present the initiatives in time order: mixed economy, Green Revolution, nationalisation, then reforms.
b) Do not confuse Pakistan's path with China's commune system.

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 innovations raise productivity and resource efficiency in farming.
3. They streamline supply chains and create direct market linkages, which ensure better prices for farmers.
4. They reduce farmers' dependence on traditional intermediaries and generate employment in rural areas.

Teacher's Note:
a) Two main value points: technical innovation and direct market linkages.
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: The government has given continuous policy and financial support to agri-startups and entrepreneurs. This support is provided through various programmes like RKVY-RAFTAAR, the Agri-infrastructure fund and Agri-SURE.

Teacher's Note:
a) Mention both "policy support" and "financial support".
b) Naming at least one programme from the passage strengthens 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: True. Agricultural productivity declined during the colonial period, but the sector showed some growth in absolute terms because the total area under cultivation expanded.

Teacher's Note:
a) Separate "growth in output" from "productivity"; productivity actually fell.
b) Write True or False first, then the reason.

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

Answer: True. The WTO aims to establish a rule-based trading regime in which nations cannot place arbitrary restrictions on trade. This ensures optimum use of world resources and protects the environment.

Teacher's Note:
a) The key phrase is "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: False. Economic growth with regional equality, not disparity, was the main goal of planning in India. The aim was to promote industry in backward regions to reduce regional disparities.

Teacher's Note:
a) Watch for the trap word "disparity" in the statement.
b) Mention the policy of setting up 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 by a government in the form of taxes, whereas non-tariff barriers are restrictions in forms other than taxes, mainly on the quantity and quality of goods imported (such as quotas).
2. Bilateral trade is the exchange of goods and services between two countries, whereas multilateral trade is trade by a country with more than two nations.

Teacher's Note:
a) Each distinction carries 1.5 marks, so write both sides clearly.
b) An example like import duty (tariff) and quota (non-tariff) makes the answer stronger.

(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 cannot compete with big firms, so they needed protection.
2. The production of several products was reserved for SSIs, depending on their ability to manufacture these goods.
3. They were given concessions such as lower excise duty and bank loans at lower interest rates.

Teacher's Note:
a) The two key steps are reservation of products and concessions.
b) Mention lower excise duty and cheaper bank loans as examples of concessions.

Please click the link below to download pdf file of CBSE Class 12 Economics Question Paper 2025 Solved Code 58-1-3