CBSE Class 12 Economics Question Paper 2026 Solved Code 58-1-3

SECTION A (Macro Economics)

1. Identify, which of the following is true at the Break Even level of Income. (Choose the correct option) [1 Mark]
(A) Slope of Consumption Curve = Slope of Saving Curve
(B) Average Propensity to Consume (APC) = Average Propensity to Save (APS)
(C) Slope of Saving Curve = Unity (1)
(D) Average Propensity to Consume (APC) = Unity (1)

Answer: (D) Average Propensity to Consume (APC) = Unity (1)

Teacher's Note:
a) At the break even point, consumption equals income (C = Y), so saving is zero.
b) Hence \( APC = \frac{C}{Y} = 1 \) and APS = 0 at this level of income.

2. Read the following statements carefully :
Statement 1 : Final goods are those goods which normally lose their identity in the production process.
Statement 2 : Final goods may get transformed during the consumption process by a consumer.
(Choose the correct option) [1 Mark]
(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: (B) Statement 1 is false and statement 2 is true.

Teacher's Note:
a) Goods that lose their identity in the production process are intermediate goods, not final goods.
b) Final goods are not transformed further in production, but they may change form while being consumed.

3. Read the following statements : Assertion (A) and Reason (R). Choose the correct option from those given below : [1 Mark]
Assertion (A) : Unilateral Transfers are recorded in the Current Account of the Balance of Payments (BoP) of a nation.
Reason (R) : Capital account records transactions which cause a change in the assets or liabilities of the 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) Unilateral transfers (gifts, remittances) do not change assets or liabilities, so they go to the current account.
b) The Reason describes the capital account, which does not explain why transfers are in the current account.

4. "In the Indian Banking System, the Statutory Liquidity Ratio (SLR) plays a vital role in controlling the credit creation capacity of the Commercial Banks, as it __________." (Choose the correct option to fill in the blank) [1 Mark]
(A) ensures that all the deposits are converted into liquid assets.
(B) requires banks to maintain a percentage of deposits in the form of liquid assets.
(C) sets the maximum interest rate which the banks can charge on loans.
(D) promote banks from lending beyond a specific proportion of their total reserves.

Answer: (B) requires banks to maintain a percentage of deposits in the form of liquid assets.

Teacher's Note:
a) SLR is kept by banks themselves in liquid assets like cash, gold and approved securities.
b) A higher SLR leaves fewer funds for lending, so credit creation falls.

5. 'In an economy, the currency held by the public, Net Demand Deposits with Commercial Banks and Net Time Deposits with Commercial Banks stand at Rs. 1,42,000 crore, Rs. 22,000 crore and Rs. 86,000 crore respectively.
The value of Money Supply (M1) would be Rs. __________ crore.
(Choose the correct option to fill in the blank) [1 Mark]
(A) 2,50,000
(B) 86,000
(C) 1,64,000
(D) 1,42,000

Answer: (C) 1,64,000

Teacher's Note:
a) M1 = Currency held by public + Net demand deposits of banks (+ other deposits with RBI, not given here).
b) M1 = 1,42,000 + 22,000 = Rs. 1,64,000 crore; time deposits are not part of M1.

6. In a two sector economy, the flow of factor payments moves from __________ to __________. (Choose the correct option to fill in the blanks) [1 Mark]
(A) firms, households
(B) firms, government
(C) banks, households
(D) households, firms

Answer: (A) firms, households

Teacher's Note:
a) Households supply factor services, and firms pay rent, wages, interest and profit to them.
b) Do not confuse this with consumption expenditure, which flows from households to firms.

7. Read the following statements : Assertion (A) and Reason (R). Choose the correct option from those given below : [1 Mark]
Assertion (A) : Money is of perishable nature and is generally accepted by all at any point of time.
Reason (R) : Money serves as a store of value, facilitating individuals to transfer purchasing power from the present to the future.
(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: (D) Assertion (A) is false, but Reason (R) is true.

Teacher's Note:
a) Money is non-perishable; that is exactly why it can work as a store of value.
b) The store of value function lets people save purchasing power for future use.

8. Read the following statements carefully :
Statement 1 : Depreciation of currency is an economic action undertaken by the government of a nation under the fixed exchange rate system.
Statement 2 : Under the floating exchange Rate system, authorities actively intervene in the foreign exchange market by way of maintaining foreign exchange reserves.
In the light of the given statements, choose the correct option from the following : [1 Mark]
(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: (D) Both statements 1 and 2 are false.

Teacher's Note:
a) Depreciation happens through market forces under a flexible system; a deliberate government cut under a fixed system is called devaluation.
b) Under a floating system, the rate is set by demand and supply, without active government intervention.

9. In an economy, when __________ is insufficient to achieve the level of output corresponding to the full employment, the difference is termed a deflationary gap. (Choose the correct option to fill in the blank) [1 Mark]
(A) ex-ante Aggregate Demand
(B) ex-post Aggregate Demand
(C) ex-ante Aggregate Supply
(D) ex-post Aggregate Supply

Answer: (A) ex-ante Aggregate Demand

Teacher's Note:
a) Deflationary gap = AD required for full employment minus actual (planned) AD.
b) Gaps are always measured in terms of ex-ante (planned) values.

10. In an economy, exclusion of ___________ may lead to under estimation of the value of Gross Domestic Product (GDP). (Choose the correct option to fill in the blank) [1 Mark]
(i) Barter Transactions
(ii) Services provided by family members
(iii) Illegal activities
(iv) Depreciation of Assets
(A) (i) and (ii)
(B) (ii) and (iii)
(C) (iii) and (iv)
(D) (i), (ii) and (iii)

Answer: (A) (i) and (ii)

Teacher's Note:
a) Barter deals and unpaid household services are productive but are not recorded in money terms.
b) Leaving them out makes GDP smaller than the true value of output.

11. "Under the provisions stated in the Section 20 and Section 21 of the Reserve Bank of India (RBI) Act, 1934, the RBI is mandated to handle the banking operations of the Government of India."
In the light of the given statement, elaborate the indicated function of the Reserve Bank of India. [3 Marks]

Answer:
1. The function indicated is that the RBI acts as the banker to the government.
2. The RBI manages the accounts of the government, receives its deposits and makes payments on its behalf. It also handles exchanges, remittances and other banking operations for the government.
3. During any financial crisis, the RBI gives credit (loans) to the government so that it can run smoothly and meet its obligations effectively.

Teacher's Note:
a) Name the function clearly as "Banker to the Government" before explaining it.
b) Mention both parts: managing accounts and payments, and giving credit in times of need.
c) This answer is marked as a whole, so write it as a connected explanation.

12. (A) Meera and Shahid are two classmates, who were comparing India's economic growth over the years.
Meera referred to the increase in Gross Domestic Product (GDP) at current prices prevailing in market, while Sahid insisted on considering GDP after adjusting for inflation. Their debate on which of the two measures gives a true picture of people's well-being, remained inconclusive.
Considering the above mentioned situation, elaborate with valid reason, which of the two variables is considered a better indicator of welfare and why ? [3 Marks]

Answer:
1. GDP after adjusting for inflation (Real GDP) is a better indicator of welfare than GDP at current prices (Nominal GDP).
2. Real GDP changes only when the physical output of goods and services changes. It removes the effect of price changes and shows the real growth of the economy.
3. Nominal GDP may rise only because prices rise, even if output does not increase. So it can give a false picture of people's well-being.

Teacher's Note:
a) First state clearly that Real GDP (Shahid's view) is better; this carries a mark.
b) Use the key phrase "eliminates the effect of change in prices".
c) Contrast it with Nominal GDP, which changes with output and/or prices.

OR

(B) Two friends, Ravi and Harry were discussing whether the money received from sale of an old car should be included in India's National income.
Ravi was of the view that it should be included in India's National income while Harry did not agree with him.
They also had difference of opinion on the treatment of brokerage paid to the car dealer.
As their Economics teacher, state the treatments with valid arguments. [3 Marks]

Answer:
1. Harry's opinion is correct.
2. The money received from the sale of an old car will not be included in India's National Income. Its value was already counted in the year in which the car was produced, so it adds nothing to the current flow of goods and services.
3. However, the brokerage paid to the car dealer will be included in India's National Income, because it is a payment for a productive service rendered in the current year.

Teacher's Note:
a) Treat the two items separately: the car sale is excluded, the brokerage is included.
b) Use the idea of "second-hand goods" and avoiding double counting for the car.
c) Brokerage is a current productive service, so it is part of national income.

13. (A) For a hypothetical economy, assuming there are only two firms (X and Y) with equal values of Gross Value Added (GVA). On the basis of the following data, estimate the values of Domestic sales of firm X : [4 Marks]
S. No. | Items | Amount (in Rs. crore)
(i) | Value of Output of firm Y | 400
(ii) | Purchases by firm X from firm Y | 40
(iii) | Exports by firm X | 20
(iv) | Purchases by firm Y from firm X | 30
(v) | Additions to Stock of firm X | 10
(vi) | Consumption of fixed capital | 20

Answer:
1. GVA of Firm Y = Value of output of firm Y - Purchases by firm Y from firm X
\( = 400 - 30 = \) Rs. 370 crore
2. Since both firms have equal GVA, GVA of Firm X = Rs. 370 crore
3. Domestic Sales of Firm X = GVA of Firm X - Exports by firm X - Additions to stock of firm X + Purchases by firm X from firm Y
\( = 370 - 20 - 10 + 40 \)
4. Domestic Sales of Firm X = Rs. 380 crore

Teacher's Note:
a) Remember: Value of output = Domestic sales + Exports + Change in stock, and GVA = Value of output - Intermediate consumption.
b) Consumption of fixed capital is not needed, because the question uses gross values.
c) Write the formula first, then substitute; marks are given for each step.

OR

(B) Ms. Reeta D'Costa, retired from the post of Income Tax Commissioner in the year 2023.
Apart from her pension, she also receives the following from various sources :
Rental income from a flat she owns.
Interest income from her fixed deposits.
Money sent by her children settled abroad.
Identify and classify, her monthly incomes into 'factor income' and 'transfer income', with valid reasons. [4 Marks]

Answer:
1. Factor income: Rental income from her flat, interest income from her fixed deposits and her retirement pension (a deferred payment for past services).
2. Transfer income: Money sent by her children settled abroad.
3. Factor income is the income earned by factors of production for rendering their productive services (rent for land/property, interest for capital, pension as deferred wages).
4. Transfer income is the income received without rendering any productive service in return, like gifts or remittances from children.

Teacher's Note:
a) Pension of a retired employee is a factor income (deferred compensation), not a transfer income.
b) Classify all four incomes, including pension, to earn full marks.
c) Test for any income: was a productive service given in return? If yes, it is factor income.

14. Michel, an entrepreneur of Country Zeta, borrowed $ 5 million from an overseas bank to expand his textile business.
During the same financial year, the Government of Country Zeta secured a loan of $ 30 Billion from an International Financial Institution to manage the ongoing Balance of Payments.
Samuel, an Economics student categorised both of these transactions as 'autonomous transactions' in the BoP account of the country.
Do you agree with his classification ? Justify your answer with valid reasons. [4 Marks]

Answer:
1. No, I do not agree with Samuel's classification.
2. The loan taken by the Government of Zeta is an accommodating transaction. Accommodating transactions are undertaken by the monetary authorities to cover the deficit or surplus in the Balance of Payments. They are not driven by any economic (profit) motive.
3. The loan taken by Michel is an autonomous transaction.
4. Autonomous transactions take place independently of the state of the BoP, and are generally made with an economic motive such as earning profit.

Teacher's Note:
a) Classify each transaction separately, with the meaning of each type.
b) Key words: autonomous = "independent of BoP, economic motive"; accommodating = "to cover BoP deficit or surplus".
c) Autonomous items are called "above the line" and accommodating items "below the line".

15. Refer the given image carefully :
Explain any two measures that can be taken by the Central Bank to control the indicated macroeconomic problem. [4 Marks]

[Figure: A weighing balance (scale). The pan on the left holds a heap of goods and is raised; the pan on the right holds a pile of coins and is lowered. Upward arrows are labelled "General Price level" and downward arrows are labelled "Value of Money".]

Answer:
The image shows a rise in the general price level and a fall in the value of money, i.e. the problem of inflation (excess demand). The Central Bank may use these measures:
1. Repo Rate: The Central Bank can raise the repo rate. Commercial banks then raise their lending rates, so credit becomes costlier for the public and borrowing falls.
2. As a result, Aggregate Demand falls and the problem of inflation is corrected.
3. Open Market Operations: The Central Bank can sell government securities in the open market. This takes funds away from commercial banks and reduces their ability to lend.
4. With less credit available, Aggregate Demand falls and inflation is controlled.

Teacher's Note:
a) First identify the problem as inflation from the rising price level and falling value of money.
b) For each measure, show the chain: tool - cost/availability of credit - fall in AD - fall in prices.
c) Other valid tools like raising CRR or bank rate can also be used.

For Visually Impaired Candidates (in lieu of Q. 15)

State and explain any two measures that can be taken by the Central Bank to control the situation of deficient demand. [4 Marks]

Answer:
1. Repo Rate: The Central Bank can lower the repo rate. Commercial banks then reduce their lending rates, so credit becomes cheaper and borrowing by the public increases.
2. As a result, Aggregate Demand rises and the problem of deficient demand is corrected.
3. Open Market Operations: The Central Bank can buy government securities in the open market. This increases the funds available with commercial banks for lending.
4. With more credit available, Aggregate Demand rises and deficient demand is corrected.

Teacher's Note:
a) Deficient demand needs an expansionary (cheap money) policy, the opposite of inflation control.
b) State the name of the tool, the direction of change, and its effect on AD.

16. (A) "Under a study, examining the spending habits of a hypothetical economy, it was observed that even households with zero income managed to consume basic necessities.
As the income of people increased, their consumption also increased, but not as rapidly as income."
Based on the given text and common understanding, answer the following questions :

(i) Identify and elaborate the type of consumption indicated in the first para of the above text. [3 Marks]

Answer:
1. The type of consumption indicated is Autonomous Consumption.
2. Autonomous consumption does not depend on the level of income; it takes place even when income is zero.
3. It is the minimum level of consumption that is essential for survival, financed by past savings or borrowing.

Teacher's Note:
a) The hint is "zero income but still consuming", which means autonomous consumption.
b) In \( C = \bar{C} + bY \), autonomous consumption is \( \bar{C} \), the intercept of the consumption curve.

(ii) Explain, the reason behind the positive slope of Aggregate Demand Curve. [3 Marks]

Answer:
1. In a two sector economy, Aggregate Demand (AD) is the sum of consumption and investment (AD = C + I).
2. Investment is assumed to be autonomous, so it stays the same at all levels of income. But consumption rises when income rises.
3. So a rise in income raises AD. The AD curve therefore slopes upward, showing a direct relationship between income and Aggregate Demand.

Teacher's Note:
a) The AD curve starts above the origin (at \( \bar{C} + I \)) and slopes upward because of induced consumption.
b) Its slope equals the MPC, which is positive but less than 1.
c) This answer is marked as a whole; link income, consumption and AD clearly.

OR

(B) Income of an economy increased from Rs. 50,000 to Rs. 1,00,000 crore. Savings of the economy increased from Rs. 5,000 crore to Rs. 20,000 crore.

(i) Calculate Average Propensity to Consume (APC) and Average Propensity to Save (APS) before and after the rise in Income. [4 Marks]

Answer:
Before the rise in income:
1. Consumption = Income - Savings = 50,000 - 5,000 = Rs. 45,000 crore
2. \( APC = \frac{C}{Y} = \frac{45000}{50000} = 0.9 \) and \( APS = \frac{S}{Y} = \frac{5000}{50000} = 0.1 \)
After the rise in income:
3. Consumption = 1,00,000 - 20,000 = Rs. 80,000 crore
4. \( APC = \frac{80000}{100000} = 0.8 \) and \( APS = \frac{20000}{100000} = 0.2 \)

Teacher's Note:
a) Find consumption first using C = Y - S.
b) Check your work: APC + APS must always equal 1 (0.9 + 0.1 and 0.8 + 0.2).

(ii) Draw appropriate conclusion regarding the behaviour of Average Propensity to Save (APS) as his income increases. [2 Marks]

Answer: As income increases from Rs. 50,000 crore to Rs. 1,00,000 crore, APS rises from 0.1 to 0.2. This shows a direct relationship between the level of income and APS: as income rises, people save a larger proportion of their income.

Teacher's Note:
a) Quote the actual values (0.1 to 0.2) as evidence for your conclusion.
b) Since APS rises, APC falls as income rises.

17. Refer the given text carefully :

According to the Economic Survey 2024-25, the government budget's projections for the fiscal year 2025-26 indicate that gross direct tax revenue will rise by 12.7%, while gross indirect tax collections are expected to grow by 8.3% relative to FY 2024-25.
Direct taxes include income tax and corporate tax, reflecting earnings and profits of households and firms. It plays a key role in revenue growth of the government. Indirect taxes encompass Goods and Services Tax (GST), custom duties and other transaction-based levies.
Higher growth rate projected for direct taxes suggests a push to enhance tax buoyancy through improved compliance and reforms. On the other hand, indirect taxes are expected to benefit from consumption trends and Goods and Services Tax (GST) administration improvements. The balance tax strategy aims to mobilise resources while supporting fiscal consolidation and sustainable economic growth.

On the basis of the above passage and common understanding, answer the following questions :

(i) Differentiate between the two types of taxes indicated in the above text, with suitable examples. [4 Marks]

Answer:
The two types of taxes indicated are direct taxes and indirect taxes.
1. Direct taxes: The impact (who pays first) and incidence (who finally bears the burden) of the tax fall on the same person. So the burden of a direct tax cannot be shifted to others.
2. Example of a direct tax: Income tax.
3. Indirect taxes: The impact and incidence of the tax may fall on different persons. So the burden of an indirect tax can be shifted to others.
4. Example of an indirect tax: Goods and Services Tax (GST).

Teacher's Note:
a) The basis of difference is impact and incidence, i.e. whether the burden can be shifted.
b) Give one example for each type; each example carries marks.
c) Corporate tax (direct) and customs duty (indirect) are other valid examples.

(ii) Elaborate the likely consequences of the tax projections made by the government. [2 Marks]

Answer: The projected rise in direct and indirect tax revenue is likely to strengthen the government's revenue base. This balanced tax strategy will help the government mobilise resources, support fiscal consolidation (lower fiscal deficit) and promote sustainable economic growth.

Teacher's Note:
a) Use the key terms from the passage: revenue base, fiscal consolidation and sustainable growth.
b) Higher tax revenue means less need for government borrowing.

SECTION B (Indian Economic Development)

18. Read the following statements : Assertion (A) and Reason (R), Choose the correct option from those given below : [1 Mark]
Assertion (A) : Education facilitates the assimilation of knowledge and competencies. It also fosters inventive capacities and enhances the aptitude to integrate advance technology.
Reason (R) : Education plays a pivotal role in transforming cognitive perspectives and serves as a catalyst for the economic advancement of a nation.
(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 describe true benefits of education as human capital.
b) The Reason speaks about the role of education in the economy, but does not explain how education builds knowledge and inventive capacity.

19. Read the following text carefully : [1 Mark]
"In the recent times, the Government of India, has introduced several measures to encourage greater public participation in the capital market, including both primary and secondary stock markets."
Under which sector have the above mentioned reforms been introduced ?
(Choose the correct option)
(A) Industrial
(B) Financial
(C) Taxation
(D) Foreign Trade

Answer: (B) Financial

Teacher's Note:
a) The capital market (primary and secondary stock markets) is part of the financial sector.
b) Financial sector reforms of 1991 also covered banks, insurance and foreign exchange markets.

20. The Montreal Protocol was signed in the year 1987 committing nations to __________. (Choose the correct option to fill in the blank) [1 Mark]
(A) protect biodiversity from any further losses.
(B) reduce the impact of global warming.
(C) protect ozone layer from depletion incurred due to chlorofluoro carbons .
(D) reduce the impact of deforestation.

Answer: (C) protect ozone layer from depletion incurred due to chlorofluoro carbons .

Teacher's Note:
a) The Montreal Protocol bans or limits ozone-depleting substances like CFCs.
b) Do not confuse it with the Kyoto Protocol, which deals with global warming.

21. Read the following statements : Assertion (A) and Reason (R), Choose the correct option from those given below : [1 Mark]
Assertion (A) : The notion of rural development encompasses a far wider spectrum than agricultural advancement.
Reason (R) : Government interventions in the agricultural sector remain imperative, as it constitutes the primary means of sustanance for the rural population.
(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) Rural development also covers health, education, infrastructure, credit and poverty removal, not just farming.
b) The Reason is about the need for government help in agriculture, so it does not explain the wider scope of rural development.

22. Identify, which of the following, highlights a highly relevant issue associated with evolving employment trends in India's labour market ? [1 Mark]
(A) Progressive increase in the share of permanent salaried employees.
(B) Increase in the proportion of casually employed individuals.
(C) Expansion of self-employment avenues in all regions.
(D) Significant rise in job opportunities within the formal sector.

Answer: (B) Increase in the proportion of casually employed individuals.

Teacher's Note:
a) The rising share of casual workers is called casualisation of the workforce.
b) It is a concern because casual workers have no job security or social security.

23. Match the terms given in Column-I with their respective meaning in Column-II. Select the correct option : [1 Mark]
Column-I | Column-II
(i) Seasonal Unemployment | (a) Private enterprises hiring less than 10 employees
(ii) Self-employed | (b) Workers using their own resources to earn livelihood
(iii) Unorganised sector | (c) Unemployment occurring in specific season
(iv) Disguised Unemployment | (d) Zero Marginal Productivity
(A) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)
(B) (i)-(b); (ii)-(a); (iii)-(c); (iv)-(d)
(C) (i)-(c); (ii)-(b); (iii)-(a); (iv)-(d)
(D) (i)-(c); (ii)-(d); (iii)-(a); (iv)-(b)

Answer: (C) (i)-(c); (ii)-(b); (iii)-(a); (iv)-(d)

Teacher's Note:
a) Disguised unemployment always links to zero marginal productivity.
b) Start with the easy pairs first, then eliminate options that do not fit.

24. "Sustainable development refers to the development that meets the need of the present generation without compromising the ability of the future generations, to meet their own needs."
The above mentioned definition has been given by __________. (Choose the correct option to fill in the blank) [1 Mark]
(A) United Nations Conference on Environment and Development
(B) United Nations Committee on Environment and Development
(C) United Nations Committee on Protection of Environment
(D) United Nations Conference on Protection of Environment

Answer: (A) United Nations Conference on Environment and Development

Teacher's Note:
a) The NCERT textbook attributes this definition to the United Nations Conference on Environment and Development (UNCED).
b) Read the options carefully; they differ only in words like "Conference" and "Committee".

25. Read the following statements : Assertion (A) and Reason (R), Choose the correct option from those given below : [1 Mark]
Assertion (A) : The Government of India adopted the measure of regulation of markets to improve marketing conditions for agricultural products.
Reason (R) : Regulation of market ensured transparent pricing, fair trade practices, and protection for farmers against exploitation in agricultural marketing.
(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: (A) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation of Assertion (A).

Teacher's Note:
a) Regulated markets were created to protect farmers from middlemen and unfair practices.
b) The Reason gives the purpose of regulation, so it explains the Assertion.

26. Arrange the following events in China's economic development history in correct chronological sequence and select the correct option : [1 Mark]
I. Great Proletarian Cultural Revolution.
II. Great leap forward
III. Introduction of Economic Reforms
IV. Launch of the First Five Year Plan
(A) II, IV, III, I
(B) IV, II, I, III
(C) II, IV, I, III
(D) IV, I, II, III

Answer: (B) IV, II, I, III

Teacher's Note:
a) Dates: First Five Year Plan 1953, Great Leap Forward 1958, Cultural Revolution 1965, Economic Reforms 1978.
b) Remember the order: Plan, Leap, Revolution, Reforms.

27. Read the following statements carefully :
Statement 1 : During the British rule in India, the export surplus was utilised to import of invisible items from Britain.
Statement 2 : Indians paid for the expenses incurred by an office set up by the colonial government in Britain.
In the light of above statements, choose the correct option from the following : [1 Mark]
(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) India's export surplus was used to pay for invisible imports like shipping, banking and insurance services from Britain.
b) It also paid for the office expenses of the colonial government in Britain and the war expenses of the British government.

28. (A) "Employment within the formal sector ensures better income and social benefits as against the informal sector."
Defend or refute the above statement with valid reason and example. [3 Marks]

Answer:
1. The given statement is defended. Formal sector workers get fair and regular wages along with social security benefits such as pension and provident fund.
2. Informal sector workers do not get regular income or social security benefits, and they can be dismissed without any compensation.
3. Example: A government employee gets a regular salary along with pension and social security, whereas a daily wage worker works without any social security.

Teacher's Note:
a) Begin by clearly stating "defended"; then give the reason for both sectors.
b) One clear example from each sector earns the third mark.

OR

(B) During the 'Mann ki Baat' program aired on 29^th June, 2025, Prime Minister shared that World Health Organisation (WHO) has declared India as a Trachoma free (an eye disease). This achievement, he shared, is a result of sustained efforts in health care, sanitation, awareness and medical access.
In the light of the above statement, explain how investments in health care contributes to a nation's development. Support your answer with valid arguments. [3 Marks]

Answer:
1. Investment in health care helps a nation's development by making a healthy workforce available. A healthy person is more productive than an unhealthy person.
2. Healthy people can supply labour without interruption for a longer period, as they fall sick less often and live longer.
3. Thus better health care raises labour productivity, promotes human capital formation and finally supports the economic development of the country.

Teacher's Note:
a) Key words: healthy workforce, higher productivity, uninterrupted labour supply, human capital formation.
b) This answer is marked as a whole; link health to productivity and then to development.

29. "In the late 1970's China's population growth rate has sharply declined as compared to India."
Elucidate the reasons and impacts of this situation. [3 Marks]

Answer:
1. Reason: In the late 1970s, the Chinese government introduced the one-child policy, which sharply reduced China's population growth rate compared to India.
2. Impact: This policy led to an ageing population in China.
3. As a result, the proportion of elderly people increased compared to the young population, which may later cause a shortage of working people.

Teacher's Note:
a) Name the "one-child policy" clearly; it is the key value point for the reason.
b) For the impact, use the term "ageing population" and mention the higher share of elderly people.

30. (A) State the meaning of 'Disguised Unemployment'. [1 Mark]

Answer: Disguised unemployment is a situation in which a person seems to be employed but does not add to the output, i.e. his marginal productivity is zero.

Teacher's Note:
a) Key phrase: "marginal productivity is zero".
b) It is common in family farms in rural India, where more people work than are needed.

(B) In the light of the given chart, analyse the gender-wise sectoral distribution of workers. [3 Marks]

[Figure: Bar chart titled "Sector-wise Gender Distribution of Workers (%)" with paired bars for Male Workers (%) and Female Workers (%). Y-axis: Percentage of Workers (0 to 80). X-axis: Sectors. Approximate values (male, female): Manufacturing 77, 22; Construction 83, 16; Trade 76, 23; Transport 86, 13; Education 55, 44; Health 48, 50; Accommodation & Restaurant 75, 23; IT/BPOs 61, 37; Financial Services 61, 37.]

Answer:
1. Male workers dominate most sectors, such as manufacturing, construction, trade and transport.
2. Female participation is very low in construction and transport, which shows gender inequality in these sectors.
3. Education and health show a more balanced distribution, and female participation here is much higher than in other sectors (in health it is even slightly more than male participation).

Teacher's Note:
a) Read the chart and quote sector names to support each point.
b) Highlight both the gap (transport, construction) and the balance (education, health).

For Visually Impaired Candidates (in lieu of Q. 30 (B))

Elaborate any two reasons behind more women employed in economic activities in Rural areas as compared to Urbans areas. [3 Marks]

Answer:
1. Women in rural areas are poorer, so they are compelled to work to support the family. Hence they take part more actively in economic activities than urban women.
2. In urban areas, men usually earn higher incomes, so families often discourage female members from taking up jobs.

Teacher's Note:
a) Link rural women's work to economic need and poverty.
b) Link lower urban participation to higher male earnings and family attitudes.

31. "At the time of independence, both India and Pakistan inherited similar colonial economic structures. Both the nations adopted many similar economic planning strategies."
Explain any two such similarities in the developmental path of India and Pakistan. [4 Marks]

Answer:
1. Mixed economy: Both India and Pakistan followed the path of a mixed economic system.
2. In this system, both the public sector and the private sector work together in the economy.
3. Import substitution: Both nations adopted the policy of import substitution.
4. The aim was to protect their domestic industries from foreign competition by producing goods at home instead of importing them.

Teacher's Note:
a) Name each strategy and then explain it; each carries 2 marks.
b) Other valid similarities include five year plans and economic reforms (both started in the 1980s-1990s).

32. (A) "The British sought to achieve their vested interest through their policies of infrastructural development in India."
Do you agree with the given statement ? Justify your answer with valid explanation. [4 Marks]

Answer:
1. Yes, I agree. The British developed basic infrastructure in India mainly to serve their own interests.
2. Roads and railways were built mainly to move the army within India.
3. They were also used to carry raw materials from the countryside to the nearest railway station or port, for export to England and other foreign places.
4. Communication tools like the electric telegraph were introduced to maintain law and order.

Teacher's Note:
a) Start with a clear "Yes" and then justify with examples of roads, railways and telegraph.
b) Stress the colonial purpose: army movement, export of raw materials and administrative control.
c) This answer is marked as a whole.

OR

(B) Explain any two objectives which British intend to achieve through their policy of infrastructure in India. [4 Marks]

Answer:
1. Movement of army and raw materials: Roads and railways were built mainly to move the army within India.
2. They also carried raw materials from the countryside to the nearest railway station or port for export to England and other foreign places.
3. Administrative control: Communication tools like the electric telegraph were introduced.
4. The telegraph helped the British strengthen their administrative control and maintain law and order across the country.

Teacher's Note:
a) Give each objective a short heading, then explain it.
b) Two objectives carry 2 marks each; do not write more than asked.

33. Read the following text carefully :

To ensure inclusive and quality education for all, the Indian government has launched several important schemes. These schemes aimed at improving access, equity and learning outcomes, especially among disadvantaged group.
The Right to Education (RTE) Act, passed by the India Parliament on August 4, 2009, guarantees free and compulsory education to every child between 6-14 years of age. It ensures that all children have access to education in neightbourhood schools, until they complete elementary education. Another key initiative is Sarva Siksha Abhiyan (SSA). It was introduced in 2001. It is one of India's flagship programmes for the Universalisation of Elementary Education.
Digital India Campaign, launched on July 1, 2015, focuses on transforming India into a digitally empowered society by improving mobile and internet connectivity, particularly in rural and remote regions. This initiative supports digital learning & access to educational resources. Through these initiatives, the government strives to create an equitable, accessible & quality driven educational environment for all children, laying a strong foundation for national development.

On the basis of the given text and common understanding, answer the following questions :

(i) Identify, which law guarantees free and compulsory education upto the age of 14 years. Explain, how does it help in enhancing access to education. [3 Marks]

Answer:
1. The Right to Education (RTE) Act, 2009 guarantees free and compulsory education up to the age of 14 years.
2. It improves access to education because every child between 6 and 14 years can attend school without any financial burden. It also provides schools in neighbourhood areas, so education is easy to reach.
3. This helps to include children from disadvantaged groups and ensures that all children complete elementary education.

Teacher's Note:
a) Naming the RTE Act, 2009 correctly carries 1 mark.
b) For access, mention "free", "compulsory" and "neighbourhood schools".

(ii) In your opinion, how has the increase in public spending on education contributed to India's social and economic transformation ? Support your answer with valid arguments. [3 Marks]

Answer:
1. Higher government spending on education has made education more accessible, especially for the weaker sections, and so it has promoted social equality.
2. Education has improved people's skills and knowledge, which has led to better job opportunities and higher productivity.
3. It has helped to improve the standard of living of people and the overall development of the country.

Teacher's Note:
a) Cover both sides: social (equality, access) and economic (skills, productivity, jobs).
b) This answer is marked as a whole; end with a link to overall development.

34. (A) (i) "Although the subsidies play a crucial role in giving incentive to farmers to adopt modern agricultural technologies, they simultaneously impose a significant fiscal strain on the resources of the Government."
Justify the given statement with valid argument. [3 Marks]

Answer:
1. Subsidies encourage farmers to adopt modern agricultural technology, because small and marginal farmers cannot afford costly inputs like HYV seeds and fertilisers without them.
2. However, subsidies place a heavy fiscal burden on the government.
3. The large expenditure on subsidies takes away resources that could be used for other development activities like infrastructure, education and health.

Teacher's Note:
a) Justify both halves of the statement: the benefit to farmers and the burden on government.
b) Use the term "opportunity cost" or "diversion of resources" for the fiscal strain.

(ii) "The strategic sale of a public sector undertaking and the minority sale of its equity are both established instruments of disinvestment."
Defend or refute, the given statement with valid arguments. [3 Marks]

Answer:
1. The given statement is defended. Both strategic sale and minority sale are methods of disinvestment used by the government to reduce its ownership and encourage private participation, which improves the efficiency and performance of public sector enterprises.
2. Strategic sale means transferring a significant share of government ownership, along with management control, to a private entity.
3. Minority sale means selling only a limited portion of shares, while the government keeps control of the enterprise.

Teacher's Note:
a) State "defended" first, then explain both methods separately.
b) The key difference is transfer of management control: yes in strategic sale, no in minority sale.

OR

(B) (i) "The Industrial Sector has performed poorly in the reform period (1991)."
Justify the given statement with valid argument. [3 Marks]

Answer:
1. The industrial sector performed poorly in the reform period because the demand for domestic industrial products decreased.
2. Cheaper imports replaced the demand for domestic goods, as import duties were reduced.
3. Moreover, infrastructure facilities, including power supply, remained inadequate due to lack of investment.

Teacher's Note:
a) Key points: falling demand, cheaper imports and poor infrastructure.
b) This answer is marked as a whole; link each reason to poor industrial growth.

(ii) Mr. Ravi, an IT entrepreneur from Bengaluru, observed that several MNC's prefer India as their outsourcing Hub for services like software development, customer support, data management etc.
His friend Priya believes this is due to certain inherent advantages of the Indian economy.
In your opinion, state and explain any two factors that make India a preferred outsourcing destination. [3 Marks]

Answer:
1. Expansion of Information Technology and Communication: India has seen fast growth of modern communication, especially Information Technology (IT), which allows services to be delivered to clients abroad quickly.
2. Availability of skilled manpower: India has a large pool of efficient and skilled workers available at a relatively low cost.

Teacher's Note:
a) State each factor as a heading (half mark) and then explain it (1 mark).
b) Low cost of skilled labour is the main reason MNCs outsource to India.

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