CBSE Class 12 Economics Sample Paper 2026 27 with Solutions PDF Download

SECTION A - MACROECONOMICS

1. Identify, which of the following expenditure falls under the category of capital expenditure. (Choose the correct option)
(i) Payment of salaries to central government employees.
(ii) Construction of new national highways under Bharatmala Pariyojana.
(iii) Interest payment by the government on past loans from World Bank.
(iv) Expenditure on installation of the Kavach automatic train protection system. [1 Mark]
Options:
(A) (i) and (ii)
(B) (ii) and (iv)
(C) (ii) and (iii)
(D) (i) and (iv)

Answer: (B) (ii) and (iv)

Teacher's Note:
a) Capital expenditure creates physical or financial assets or reduces liabilities of the government.
b) New highways and the Kavach train protection system are new assets, so they are capital expenditure.
c) Salaries and interest payments create no asset, so they are revenue expenditure.

2. Read the following statements carefully:
Statement 1: M1 measure of money supply constitutes currency and demand deposits held by the public.
Statement 2: Demand deposits are those deposits with commercial banks, that can be withdrawn on demand by the depositors.
In 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: (C) Both Statements 1 and 2 are true.

Teacher's Note:
a) M1 = currency held by the public + net demand deposits with banks (+ other deposits with RBI).
b) Demand deposits (current and savings accounts) can be withdrawn by cheque at any time.

3. Ceteris paribus, a rise in the price of foreign currency sets off a chain of effects in the foreign exchange market of an economy.
Identify, which of the following sequence explains this process.
(i) National Income will rise
(ii) Demand for foreign currency will fall
(iii) Imported goods become costlier (Choose the correct option) [1 Mark]
Options:
(A) (i), (ii), (iii)
(B) (ii), (i), (iii)
(C) (iii), (i), (ii)
(D) (iii), (ii), (i)

Answer: (D) (iii), (ii), (i)

Teacher's Note:
a) When foreign currency becomes dearer, imports become costlier in terms of domestic currency.
b) Costlier imports reduce the demand for foreign currency, and spending shifts to domestic goods, which raises national income.

4. Suppose, for a given year, the fiscal deficit of an economy is estimated at Rs. 5,000 crore. The total government expenditure is Rs. 18,000 crore, while non-tax revenue and capital receipts (excluding borrowings) together amount to Rs. 3,000 crore. (Choose the correct option to fill up the blank)
The tax revenue of the government is Rs. ________ crore. [1 Mark]
Options:
(A) 10,000
(B) 12,000
(C) 13,000
(D) 15,000

Answer: (A) 10,000

Teacher's Note:
a) Fiscal Deficit = Total Expenditure - (Tax Revenue + Non-tax Revenue + Capital Receipts excluding borrowings).
b) \( 5,000 = 18,000 - (\text{Tax Revenue} + 3,000) \), so Tax Revenue = \( 18,000 - 5,000 - 3,000 = \) Rs. 10,000 crore.

5. The Government of India in its Union Budget 2026-27 has decided to exempt fish caught by Indian fishing vessels operating in the Exclusive Economic Zone (EEZ) and on the High Seas from duty.
Identify the objective behind the initiative taken by the Government of India as stated above. (Choose the correct option) [1 Mark]
(A) Allocation Function
(B) Distribution Function
(C) Stabilisation Function
(D) Disposition Function

Answer: (A) Allocation Function

Teacher's Note:
a) Tax exemptions for a particular activity are used to direct resources towards that activity.
b) Directing resources to desired areas of production is the allocation function of the government budget.

6. Refer to the given diagram carefully:
The slope of Consumption Curve would be ______. (Choose the correct option to fill up the blank) [1 Mark]
Options:
(A) 1
(B) 0.8
(C) 0.25
(D) 0.75

[Figure: Graph with LEVEL OF INCOME on the x-axis (X) and AGGREGATE DEMAND on the y-axis (Y), origin 0. A 45° line (marked Y) rises from the origin. Two parallel upward-sloping lines are drawn: the lower one labelled AD = C + I and the upper one labelled AD' = C + I + ΔI. The vertical gap between the two AD lines is marked ΔI = 20. Vertical lines drop to the x-axis from the points where each AD line cuts the 45° line; the gap between them on the x-axis is marked ΔY=80.]

Answer: (D) 0.75

Teacher's Note:
a) Investment multiplier \( k = \frac{\Delta Y}{\Delta I} = \frac{80}{20} = 4 \).
b) \( k = \frac{1}{1 - MPC} \), so \( 4 = \frac{1}{1 - MPC} \) gives \( MPC = 0.75 \).
c) The slope of the consumption curve is MPC, so it is 0.75.

For Visually Impaired Candidates (in lieu of Q. 6)

For a hypothetical economy, a rise by Rs. 20 crore in investment leads to a rise by Rs. 80 crore in income.
The slope of Consumption Curve would be ______. (Choose the correct option to fill up the blank) [1 Mark]
Options:
(A) 1
(B) 0.8
(C) 0.25
(D) 0.75

Answer: (D) 0.75

Teacher's Note:
a) \( k = \frac{\Delta Y}{\Delta I} = \frac{80}{20} = 4 \) and \( MPC = 1 - \frac{1}{k} = 1 - 0.25 = 0.75 \).
b) Do not choose 0.25; that is MPS, the slope of the saving curve.

7. Read the following statements: Assertion (A) and Reason (R). Choose the correct option from those given below:
Assertion (A): Goods such as cars, refrigerators etc. are non-durable in nature, regardless of whether they are used by households or firms.
Reason (R): Consumer durable goods and capital goods have a common feature of durability, even though they may have different end users. [1 Mark]
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: (D) Assertion (A) is false, but Reason (R) is true.

Teacher's Note:
a) Cars and refrigerators are durable goods; they last for many years.
b) Used by households they are consumer durables; used by firms they are capital goods. Both share durability.

8. An Indian art gallery sells an antique Madhubani painting to a buyer in France for 4,000 euros. This transaction will be recorded on ______ side and ______ account of the Balance of Payments Account. (Choose the correct option to fill up the blank) [1 Mark]
(A) debit, current
(B) credit, current
(C) debit, capital
(D) credit, capital

Answer: (B) credit, current

Teacher's Note:
a) The sale is an export of goods, which brings foreign exchange into India, so it is a credit entry.
b) Export and import of goods are recorded in the current account.

9. Shraddha Kapur initially lived in a barter-based system where exchanging goods was difficult owing to practical problems. After the introduction of money, she could easily buy goods using currency and repay her loan in fixed instalments over time. This change made transactions easier and future payments reliable.
The functions of money highlighted in the above text are ________ and _______. (Choose the correct option to fill up the blank) [1 Mark]
(A) Store of value and medium of exchange
(B) Measure of value and standard of deferred payments
(C) Medium of exchange and standard of deferred payments
(D) Measure of value and store of value

Answer: (C) Medium of exchange and standard of deferred payments

Teacher's Note:
a) Buying goods with currency shows money as a medium of exchange.
b) Repaying a loan in fixed instalments over time shows money as a standard of deferred payments.

10. The value of investment multiplier ranges between ______ and ________. (Choose the correct option to fill up the blank) [1 Mark]
(A) 0,1
(B) -1, 1
(C) 1, infinity
(D) 0, infinity

Answer: (C) 1, infinity

Teacher's Note:
a) \( k = \frac{1}{1 - MPC} \); when \( MPC = 0 \), \( k = 1 \), and when \( MPC = 1 \), \( k \) is infinity.
b) Since MPC lies between 0 and 1, the multiplier lies between 1 and infinity.

11. (A) Using the given estimates for a hypothetical economy, show that Gross Domestic Product at Market Price by Value-Added Method and Expenditure Method yields the same result. [3 Marks]
S. No. | Items | Amount (in Rs. crore)
(i) | Private Final Consumption Expenditure | 500
(ii) | Value of Output | 1900
(iii) | Government Final Consumption Expenditure | 400
(iv) | Gross Domestic Capital Formation | 600
(v) | Change in Stock | 100
(vi) | Consumption of Fixed Capital | 30
(vii) | Net Exports | 70
(viii) | Intermediate Consumption | 330

Answer:
Value-Added Method:
Gross Domestic Product at Market Price = Value of Output - Intermediate Consumption = (ii) - (viii)
\( = 1,900 - 330 \)
= Rs. 1,570 crore
Expenditure Method:
Gross Domestic Product at Market Price = Private Final Consumption Expenditure + Government Final Consumption Expenditure + Gross Domestic Capital Formation + Net Exports = (i) + (iii) + (iv) + (vii)
\( = 500 + 400 + 600 + 70 \)
= Rs. 1,570 crore
Both methods give the same GDP at Market Price of Rs. 1,570 crore.

Teacher's Note:
a) Change in Stock is already included in Gross Domestic Capital Formation, so do not add it again.
b) Consumption of Fixed Capital is not used, because the question asks for Gross (not Net) Domestic Product.
c) Write the formula before substituting values; each step carries half a mark.

OR

(B) "Each factor of production contributes a distinct service in the production process and receives a specific reward in return."
In the light of the given statement, answer the following questions:

(I) List any two factors of production and their respective remuneration earned. [2 Marks]

Answer:
1. Land - Rent
2. Capital - Interest

Teacher's Note:
a) Each factor and its matching reward carries half a mark, so write them as clear pairs.
b) The other pairs are Labour - Wages and Entrepreneurship - Profit.

(II) Define any one of the remuneration earned listed above. [1 Mark]

Answer: Rent: Rent is the income earned by the owner of land (natural resources) for providing its services in production.

Teacher's Note:
a) Define a remuneration you have listed in part (I), not a different one.
b) Link the reward to the factor owner, for example rent to the landowner.

12. Refer to the given cartoon strip carefully:
Analyse the impact of introduction of Goods and Service Tax in improving the efficiency of the taxation system and benefitting the overall economy. [3 Marks]

[Figure: A two-panel cartoon strip. Left panel titled "Before GST...": a boy asks, "Why does the same toy cost differently in different states?" A toy robot is shown with price tags of Rs. 200 and Rs. 250 and labels VAT, EXCISE and SERVICE TAX. A girl answers, "As India has multiple indirect taxes like VAT, Excise, Service Tax etc." Right panel titled "GST : One Nation, One Tax!": the boy says, "That's why the government introduced GST - One Nation, One Tax." A map of India reads "GST ONE NATION, ONE TAX!" with trucks on a road, and a caption says, "So GST replaced many taxes and made prices more transparent."]

Answer:
1. GST has simplified the tax structure by subsuming a variety of indirect taxes like VAT, excise duty and service tax across the country, so the same good is taxed in the same way everywhere.
2. It has reduced the cost of business operations and removed the cascading effect (tax on tax) of various taxes on consumers. The overall cost of production has fallen, making Indian products and services more competitive in domestic and international markets.
3. It has ensured higher transparency in the taxation system, which has enhanced the ease of doing business.

Teacher's Note:
a) Use the keywords "subsumed many indirect taxes", "cascading effect removed" and "transparency".
b) Cover both parts of the question: efficiency of the tax system and benefit to the overall economy.

For Visually Impaired Candidates (in lieu of Q. 12)

Differentiate between direct taxes and indirect taxes with the help of a suitable example. [3 Marks]

Answer:
1. Direct taxes are those taxes whose impact and incidence lie on the same entity. Example: Income Tax.
2. Indirect taxes are those taxes whose impact and incidence may lie on different entities. Example: GST.

Teacher's Note:
a) The basis of difference is impact (who pays the tax first) and incidence (who finally bears it).
b) Each definition carries 1 mark and each example carries half a mark.

13. (A) Like individual consumers, businesses and organisation of all kinds, banks need their own mechanism to transfer funds and settle inter-bank transactions, such as borrowing from and lending to other banks and customer transactions.
Source: https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/RWF15012018_FCD40172…
Identify and explain the function fulfilled by the Reserve Bank of India in the aforesaid statement. [4 Marks]

Answer: The function fulfilled by the Reserve Bank of India is Banker's Bank.
1. The RBI accepts deposits from commercial banks and also advances loans to them as and when required.
2. It maintains the reserves of all commercial banks and uses them to settle inter-bank claims.
3. As the highest authority in the banking system, it supports banks during financial distress by acting as the lender of last resort.
4. It provides short-term credit to commercial banks against approved securities.

Teacher's Note:
a) Identification ("Banker's Bank") carries 1 mark; the explanation carries 3 marks.
b) The phrase "settle inter-bank transactions" in the text is the clue to this function.

OR

(B) (I) Define Cash Reserve Ratio. [1 Mark]

Answer: Cash Reserve Ratio refers to the certain minimum percentage of net demand and time liabilities which banks are required to keep with the Central Bank in the form of cash.

Teacher's Note:
a) Key words: "minimum percentage", "net demand and time liabilities", "with the Central Bank", "in cash".
b) Do not confuse CRR with SLR, which banks keep with themselves as liquid assets.

(II) In the process of credit creation, the Cash Reserve Ratio (CRR) fixed by the Reserve Bank of India (RBI) plays a crucial role. On 6th June 2025, the RBI reduced the CRR by 100 basis points.
Assuming the entire banking system functions as a single bank and all transactions are routed through banks, analyse the impact of this change on the total money creation in the banking system. [3 Marks]

Answer:
1. The total amount of credit creation in an economy depends on the amount of initial deposits and the Cash Reserve Ratio (CRR).
2. Keeping primary deposits constant, the cut in CRR by the RBI leaves greater funds with commercial banks, which increases their lending capacity.
3. Thus, the total credit (money) creation in the banking system increases.

Teacher's Note:
a) Money multiplier \( = \frac{1}{\text{CRR}} \); a lower CRR means a higher multiplier and more credit creation.
b) 100 basis points is equal to 1 percentage point.

14. In a hypothetical economy called BoPia, the equilibrium exchange rate is 72 Bopas per US dollar determined through market forces. Over time, BoPia has made substantial investments in human capital formation. As a result, the country now has an abundant supply of skilled labour, which has made it an attractive destination for Foreign Direct Investments (FDI). Hence, multinational companies across the world are investing huge amounts of capital in BoPia.

(I) Assuming all other factors constant, explain the effect of increased FDI inflows on BoPia's Balance of Payments Account. [2 Marks]

Answer:
1. A rise in FDI inflows will increase the supply of foreign exchange (US dollars) in BoPia.
2. This increased inflow of foreign exchange strengthens the overall Balance of Payments position and may lead to a surplus in the BoP.

Teacher's Note:
a) FDI inflows are recorded on the credit side of the capital account.
b) Use the keywords "supply of foreign exchange rises" and "BoP surplus".

(II) Suppose the competent authority does not intervene in the process of determination of exchange rate in BoPia. Identify the foreign exchange rate system prevailing in BoPia and mention one of its merits. [2 Marks]

Answer:
1. With no intervention by the competent authority (Central Bank or government), the flexible exchange rate system prevails in BoPia.
2. Merit: Under the flexible exchange rate system, there is no need for the Central Bank or government to maintain huge foreign exchange reserves.

Teacher's Note:
a) Identification carries 1 mark and the merit carries 1 mark.
b) Under a flexible system the rate is set by market demand and supply of foreign exchange.

15. Assuming for a hypothetical simplified economy,
Consumption function, \( C = 150 + 0.8Y \)
Autonomous Investment \( (I_o) = 250 \)
Full employment level of income \( (Y_f) = 1,600 \)

(I) Determine the equilibrium level of income. [2 Marks]

Answer:
At equilibrium level of income, \( Y = C + I \)
\( Y = 150 + 0.8Y + 250 \)
\( Y - 0.8Y = 400 \)
\( 0.2Y = 400 \)
\( Y = \frac{400}{0.2} = 2,000 \)
Equilibrium level of income = 2,000

Teacher's Note:
a) Writing the equilibrium condition \( Y = C + I \) carries 1 mark; do not skip it.
b) Check: at \( Y = 2,000 \), \( C = 150 + 1,600 = 1,750 \) and \( C + I = 1,750 + 250 = 2,000 \).

(II) Outline whether the economy is facing the situation of excess demand or deficient demand and state its impact on the level of output, employment and general price level in the economy. [2 Marks]

Answer:
1. The economy is facing the problem of excess demand, as the equilibrium level of income (2,000) is greater than the full employment level of income (1,600).
2. Excess demand will lead to an increase in the general price level in the economy, with no change in the level of output and employment.

Teacher's Note:
a) Compare the two numbers (2,000 greater than 1,600) to justify your answer.
b) At full employment, output cannot rise further, so excess demand only raises prices (inflation).

16. Refer to the given text carefully:

India's economic ascent continues to capture global attention. Already the world's fourth largest economy, the nation is charting a confident course toward becoming the third largest economy by 2030, with Gross Domestic Product (GDP) projected at USD 7.3 trillion. The current growth phase reflects the strength of decisive policymaking, structural reforms, and India's deepening global integration. With growth accelerating, India has once again outpaced global peers, reinforcing its position as the fastest-growing major economy. This surge is supported by resilient domestic demand, moderating inflation and higher labour force participation. A revival in domestic investment and strong investor sentiment signals a stable and broad-based economy. As these reforms gather pace and consumption remains optimistic, India's economic outlook continues to upbeat, signalling sustained momentum and growth across sectors.
Gross Domestic Product (GDP) is one of the primary indicators of overall economic performance which reflects the rate at which the country is expanding. As per the latest data, the GDP of India (adjusted for inflation) is estimated to grow by 8.2% in Q2 of FY 2025-26 against the growth rate of 5.6% during Q2 of FY 2024-25. Each sector of the economy is playing a pivotal role in the growth of the country.
Source: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2195990&reg=3&lang=1 (adapted and modified)
On the basis of the given text and common understanding, answer the following questions:

(I) Define Gross Domestic Product. [1 Mark]

Answer: Gross Domestic Product (GDP) refers to the market value of final goods and services produced in the domestic territory of an economy during a given period of time.

Teacher's Note:
a) Key words: "market value", "final goods and services", "domestic territory", "given period of time".
b) Missing "final" is a common mistake; intermediate goods are not counted.

(II) "GDP of India, adjusted for inflation, is estimated to grow by 8.2% in Q2 of FY 2025."
Elucidate whether the given projection represents Nominal GDP or Real GDP. Also, explain any one benefit of using this particular measure. [2 Marks]

Answer:
1. Real GDP is the market value of final goods and services produced in the domestic territory of an economy during a given period of time, measured at constant prices, that is, adjusted for inflation. Hence, the given projection represents Real GDP.
2. Benefit: Real GDP is a better indicator of economic growth, as it is affected only by changes in physical output and removes the effect of price changes.

Teacher's Note:
a) The phrase "adjusted for inflation" is the clue that the figure is Real GDP.
b) Nominal GDP is at current prices; it can rise only because prices rise, even if output does not.

(III) Comment upon the strong global position of India's economy stating the major reasons for its recent growth surge. [3 Marks]

Answer: India holds a strong global position. It is already the fourth largest economy and is moving towards becoming the third largest economy by 2030. The major reasons for its growth surge are:
1. Decisive policymaking, structural reforms and deeper global integration.
2. Resilient domestic demand, moderating inflation and higher labour force participation.
3. Revival of domestic investment and strong investor confidence, leading to broad-based and sustained economic growth.

Teacher's Note:
a) Pick the reasons from the passage itself; the answer is marked as a whole.
b) Begin with a clear comment on India's position before listing the reasons.

17. (A) (I) State and explain the two components of Consumption Function. [3 Marks]

Answer:
1. Autonomous Consumption: It refers to the minimum level of consumption that takes place even when income is zero. It does not depend on income.
2. Induced Consumption: It refers to that part of consumption which varies directly with the level of income.

Teacher's Note:
a) In \( C = \bar{C} + bY \), \( \bar{C} \) is autonomous consumption and \( bY \) is induced consumption.
b) Each component carries half a mark for the name and 1 mark for the explanation.

(II) After assessing prevailing liquidity and financial conditions, the Reserve Bank of India (RBI) on December 23, 2025, announced that it would conduct Open Market Operations (OMO) purchase auctions of Government of India securities totalling Rs. 2,00,000 crore (USD 22.34 billion).
Briefly state the rationale behind the step taken by the Reserve Bank of India. Explain its implications on Aggregate Demand. [3 Marks]

Answer:
1. Rationale: The RBI announced OMO purchase auctions of Government of India securities worth Rs. 2,00,000 crore to address the situation of deflation.
2. By purchasing government securities in the open market, the RBI infuses more liquidity into the economy, which increases the funds available with commercial banks for lending.
3. As credit becomes more available, borrowing and spending rise, which may lead to an increase in Aggregate Demand.

Teacher's Note:
a) Purchase of securities injects money; sale of securities withdraws money.
b) The rationale carries 1 mark and the effect on Aggregate Demand carries 2 marks.

OR

(B) (I) State whether the following statements are true or false, giving valid reasons in support of your answer:

(a) Average Propensity to Consume (APC) at break-even level of income is always equal to one. [2 Marks]

Answer: True. At the break-even level of income, consumption is equal to income and savings are zero. APC is consumption per unit of income, \( APC = \frac{C}{Y} \). Since \( C = Y \) at the break-even level, APC becomes 1.

Teacher's Note:
a) Write "True" first; the reason carries the marks.
b) At the break-even point, \( S = 0 \), so \( APS = 0 \) and \( APC = 1 \).

(b) When ex-ante savings is more than ex-ante investments, it may lead to decumulation of inventories. [2 Marks]

Answer: False. When ex-ante savings exceed ex-ante investments, households are planning to consume less than what the firms expected them to consume. This leads to unintended accumulation (not decumulation) of inventories.

Teacher's Note:
a) Planned saving greater than planned investment means Aggregate Demand is less than Aggregate Supply.
b) Unsold goods pile up, so inventories accumulate; decumulation happens in the opposite case.

(II) The Aggregate Demand curve becomes distant from the Investment Curve with the increase in the level of income.
Defend or refute the given statement, giving valid reasons in support of your answer. [2 Marks]

Answer: The given statement is defended. The vertical distance between the Aggregate Demand (AD) curve and the Investment curve represents consumption. As income increases, investment remains constant, whereas induced consumption increases. So the AD curve moves further away from the Investment curve. In a diagram with income on the x-axis, the Investment curve is a horizontal line and the AD curve slopes upward above it, with the gap between them widening as income rises.

Teacher's Note:
a) \( AD = C + I \), so \( AD - I = C \); the gap between the two curves is consumption.
b) Investment is autonomous (constant), while consumption rises with income.

SECTION B - INDIAN ECONOMIC DEVELOPMENT

18. Read the following statements carefully:
Statement 1: In the normal course of development, countries shift employment and output from agriculture to industry and then to services.
Statement 2: The service sector is the key driver of development for both India and Pakistan, with a direct shift from agriculture to service sector.
In 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: (C) Both Statements 1 and 2 are true.

Teacher's Note:
a) The normal path of development is agriculture to industry to services.
b) In India and Pakistan, the shift has been directly from agriculture to services, and services drive growth.

19. Match the set of type of employment given in Column I with corresponding example given in Column II and choose the correct option: [1 Mark]
Column I | Column II
(p) Self-employed | i An engineer working with ONGC
(q) Regular salaried employees | ii A construction worker
(r) Casual wage labourers | iii Photographer running own studio
Options:
(A) (p)-ii, (q)-i, (r)-iii
(B) (p)-iii, (q)-ii, (r)-i
(C) (p)-i, (q)-iii, (r)-ii
(D) (p)-iii, (q)-i, (r)-ii

Answer: (D) (p)-iii, (q)-i, (r)-ii

Teacher's Note:
a) A photographer running his own studio uses his own resources, so he is self-employed.
b) An engineer with ONGC gets a regular salary; a construction worker is a casual wage labourer.

20. Read the following statements: Assertion (A) and Reason (R). Choose the correct option from those given below:
Assertion (A): The real motive behind the infrastructural development initiated by the British was to subserve the colonial interests.
Reason (R): Commercialisation of Indian agriculture during the British rule helped to strengthen the self-sufficiency of the village economies in India. [1 Mark]
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) Railways, roads and ports were built mainly to serve British colonial interests.
b) Commercialisation of agriculture weakened, not strengthened, the self-sufficiency of village economies.

21. 'Empirical evidence regarding the impact of human capital on economic growth is often described as nebulous.'
Due to measurement problems, _________may not reflect the actual quality/status of education/health of the people in a country.
(i) years of schooling
(ii) teacher-pupil ratio
(iii) life-expectancy (Choose the correct option to fill up the blank) [1 Mark]
Options:
(A) (i) and (ii)
(B) (i) and (iii)
(C) (ii) and (iii)
(D) (i), (ii) and (iii)

Answer: (D) (i), (ii) and (iii)

Teacher's Note:
a) Years of schooling and teacher-pupil ratio do not show the quality of education.
b) Life expectancy does not show the quality of health of the people.

22. Refer the following image:
Identify the distinguished thinker, who is considered as the Architect of Indian planning. (Choose the correct option) [1 Mark]
Options:
(A) Jawaharlal Nehru
(B) Prasanta Chandra Mahalanobis
(C) Amartya Sen
(D) Dadabhai Naoroji

[Figure: Photograph of an elderly man wearing spectacles, a dark cap and a dark high-collared coat with a small badge.]

Answer: (B) Prasanta Chandra Mahalanobis

Teacher's Note:
a) P.C. Mahalanobis is known as the architect of Indian planning; the Second Five Year Plan was based on his ideas.
b) He also founded the Indian Statistical Institute in Calcutta.

For Visually Impaired Candidates (in lieu of Q. 22)

_______ established the Indian Statistical Institute (ISI) in Calcutta. (Choose the correct option to fill up the blank) [1 Mark]
Options:
(A) Jawaharlal Nehru
(B) Prasanta Chandra Mahalanobis
(C) Amartya Sen
(D) Dadabhai Naoroji

Answer: (B) Prasanta Chandra Mahalanobis

Teacher's Note:
a) Mahalanobis established the Indian Statistical Institute (ISI) in Calcutta.
b) He is also called the architect of Indian planning.

23. Arrange the following events in chronological order:
(i) Introduction of economic reforms in Pakistan
(ii) China's Great Proletarian Cultural Revolution
(iii) Nationalisation of capital goods industries in Pakistan
(iv) India's last Five-Year Plan
Choose the correct option: [1 Mark]
(A) (ii) → (iii) → (i) → (iv)
(B) (iii) → (ii) → (i) → (iv)
(C) (ii) → (i) → (iii) → (iv)
(D) (iii) → (i) → (ii) → (iv)

Answer: (A) (ii) → (iii) → (i) → (iv)

Teacher's Note:
a) Cultural Revolution in China: 1966-76; nationalisation of capital goods industries in Pakistan: 1970s.
b) Economic reforms in Pakistan: 1988; India's last (Twelfth) Five Year Plan: 2012-17.

24. "In 1991, as an immediate measure to resolve the balance of payments crisis, the rupee was devalued against foreign currencies."
Identify the liberalisation reform indicated in the aforesaid statement. (Choose the correct option) [1 Mark]
Options:
(A) Industrial Sector
(B) Tax
(C) Foreign Exchange
(D) Trade and Investment Policy

Answer: (C) Foreign Exchange

Teacher's Note:
a) Devaluation of the rupee in 1991 was the first step of foreign exchange reforms.
b) It raised the inflow of foreign exchange and helped resolve the balance of payments crisis.

25. Identify which of the following is not the function of National Bank for Agriculture and Rural development (NABARD). (Choose the correct option) [1 Mark]
(A) Serving as apex funding agency for institutions providing rural credit.
(B) Monitoring, evaluating and coordinating rural financing activities.
(C) Formulating and implementing monetary policy.
(D) Coordinating rural credit policies with the government.

Answer: (C) Formulating and implementing monetary policy.

Teacher's Note:
a) Monetary policy is formulated and implemented by the Reserve Bank of India, not NABARD.
b) NABARD (set up in 1982) is the apex body that coordinates the rural financing system.

26. In India, land ceiling legislation faced hurdles primarily because ________. (Choose the correct option to fill up the blank)
(i) the big landlords challenged the legislation in the courts
(ii) of multiple loopholes in the legislation
(iii) the landlords registered the land under relatives' names
(iv) of the 'land to the tiller' policy of the government [1 Mark]
Option:
(A) (i),(ii),(iii) and (iv)
(B) (i),(ii) and (iii)
(C) (i) and (iv)
(D) (iv) only

Answer: (B) (i),(ii) and (iii)

Teacher's Note:
a) Court cases by big landlords, loopholes in the law and transfer of land to relatives delayed land ceiling.
b) 'Land to the tiller' was a separate land reform policy, not a hurdle to land ceiling.

27. Read the following statements carefully:
Statement 1: French traveller Bernier observed that pre-British agriculture in Bengal was stagnant and unable to meet local needs.
Statement 2: In the 17th century, Bengal was a prosperous exporter of cotton and silk textiles, as well as rice, sugar, and butter.
In 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: (B) Statement 1 is false and Statement 2 is true.

Teacher's Note:
a) Bernier described 17th century Bengal as rich and prosperous, not stagnant.
b) Bengal produced enough for its own needs and also exported textiles, rice, sugar and butter.

28. Refer to the following text:

The Government of India, decided to reduce its role in Public Sector Undertakings (PSUs) to improve efficiency and reduce fiscal burden.
As per the policy decision, government companies are converted into private companies in two ways.
Answer the following questions in the light of given text and common understanding:

(I) Identify the policy highlighted in the step initiated by the government. [1 Mark]

Answer: The policy highlighted in the given text is Privatisation.

Teacher's Note:
a) Reducing the government's role in PSUs and converting them into private companies is privatisation.
b) Privatisation is one of the three parts of the 1991 reforms (LPG).

(II) Briefly explain the two ways in which government companies can be converted into private companies. [2 Marks]

Answer:
1. By withdrawal of the government from the ownership and management of public sector companies.
2. By outright sale of public sector companies to the private sector.

Teacher's Note:
a) Each way carries 1 mark.
b) Use the keywords "withdrawal from ownership and management" and "outright sale".

29. (A) Though livestock population in India is quite impressive but its productivity is quite low.
Briefly explain any two initiatives that can be taken to enhance the livestock productivity. [3 Marks]

Answer:
1. Improved breeds and modern technology: Encouraging improved animal breeds and the use of modern technology will increase the efficiency and output of livestock.
2. Veterinary clinics: Establishing veterinary clinics with improved facilities will ensure better health of livestock and raise their productivity.

Teacher's Note:
a) Each initiative carries one and a half marks, so name it and explain how it raises productivity.
b) Give exactly two initiatives, as the question asks for "any two".

OR

(B) Mehak is employed in a private firm which has hired only five workers. She generally remains insecure that she can be terminated from her job, without any prior notice. In contrast, her elder sister Sehaj works as a nurse in a government hospital.
On the basis of the given text and common understanding answer the following questions:

(I) Identify the sectors in which Mehak and Sehaj are employed. [1 Mark]

Answer: Mehak is employed in the informal sector, whereas Sehaj is working in the formal sector.

Teacher's Note:
a) A private firm hiring fewer than 10 workers belongs to the informal sector.
b) All public sector establishments, such as a government hospital, are in the formal sector.

(II) State any two differences between the identified sectors in which they are working. [2 Marks]

Answer:
1. Workers in the informal sector do not have any job protection, whereas workers in the formal sector enjoy job security.
2. Workers in the informal sector generally do not have a regular income, whereas workers in the formal sector earn a regular income along with social security benefits.

Teacher's Note:
a) Write each difference as a contrast between the two sectors, using "whereas".
b) Key words: "job security", "regular income", "social security benefits".

30. (I) Explain briefly the role of Karve Committee, 1955 in promoting rural development. [2 Marks]

Answer: The Karve Committee (1955) played an important role in promoting rural development, as it focussed on the development of village and small-scale industries. These industries are labour-intensive and therefore generate more employment in rural areas.

Teacher's Note:
a) Link the committee to "village and small-scale industries".
b) The key reason is that these industries are labour-intensive and create employment.

(II) "Britain maintained a monopoly control over India's exports and imports."
Justify the statement, giving valid reasons in support of your answer. [2 Marks]

Answer:
1. More than half of India's foreign trade was restricted to Britain, while the rest was allowed with only a few other nations.
2. The opening of the Suez Canal in 1869 further intensified British control over India's foreign trade.

Teacher's Note:
a) Remember the year 1869 for the Suez Canal; it made the trade route shorter and cheaper for Britain.
b) Use the word "monopoly" in your answer to link to the statement.

31. "Government of India has played an important role in generating employment directly /indirectly."
Do you agree with the given statement? Give valid reasons in support of your answer. [4 Marks]

Answer: Yes, I agree with the given statement. The Government of India has generated employment in two ways:
1. Direct Employment: The government directly provides jobs by recruiting people in administrative departments, public sector industries and government-run organisations.
2. Indirect Employment: When government enterprises increase their production, related private sector businesses also expand. This creates additional job opportunities in the private sector.

Teacher's Note:
a) Each way carries 2 marks; explain both direct and indirect employment.
b) Begin with a clear stand ("Yes, I agree") before giving the reasons.

32. (A) Refer the following text carefully:
Keha and Mandeep graduated recently. Keha in order to improve her physical fitness, reduce stress and increase overall well-being, enrolls in yoga classes, while Mandeep, invests in internet data, online job portals and counselling services to explore suitable career opportunities.
Identify and explain the sources of human capital formation indicated in the above text. [4 Marks]

Answer:
1. Keha - Expenditure on health: Her enrolment in yoga classes is an expenditure on health. Good physical health improves efficiency, learning ability and long-term work performance.
2. It not only improves her well-being but also contributes to a robust and efficient future labour force.
3. Mandeep - Expenditure on information: His spending on internet data, online job portals and career counselling is an expenditure on information.
4. By gaining knowledge and professional guidance, he improves his employability and productivity. This raises his earning potential and contributes to human capital formation.

Teacher's Note:
a) Identification of each source carries half a mark and its explanation one and a half marks.
b) Use the exact terms "expenditure on health" and "expenditure on information".

OR

(B) Avyaan's education enables him to take informed decisions related to his health, finances, and social responsibilities. On the other hand, Amyra has received technical training in machine operations to improve her skills and productivity with the aim of increasing output.
In the context of the distinction between human development and human capital formation, identify which case represents human development. Give valid reasons to justify your answer. [4 Marks]

Answer: Avyaan's case represents human development.
1. Human development focuses on expanding an individual's choices and improving overall well-being, rather than merely increasing income.
2. Avyaan's education enables him to make informed decisions about health and finances, which enhances his quality of life.
3. On the other hand, Amyra's technical training is aimed at upgrading her skills and efficiency to boost output.
4. This represents human capital formation, as it is mainly directed towards economic benefits and increased productivity.

Teacher's Note:
a) Human capital treats people as a means to raise productivity; human development treats well-being as an end in itself.
b) Identify the case first, then contrast it with the other case.

33. (A) (I) Refer to the following data carefully:
Some Selected Indicators of Human Development, 2017-2019
Item | India | China | Pakistan
Maternal Mortality Rate (per 1 lakh births) | 103 | 23 | 154
Gross National Income per Capita (PPP US$) | 6,951 | 18,025 | 5,374
Mean years of Schooling (aged 15 and above) in % | 6.6 | 8.1 | 4.4
People using at least basic drinking Water Source (% of population) | 93 | 97 | 90
Answer the following questions on the basis of the given data and common understanding:

(a) List one key measure of both income and health indicators given in the above table. [1 Mark]

Answer: Income indicator: Gross National Income per Capita (PPP US$). Health indicator: Maternal Mortality Rate (per 1 lakh births).

Teacher's Note:
a) Each indicator carries half a mark.
b) Name the indicators exactly as they appear in the table.

(b) On the basis of the given data, compare and critically examine any two human development indicators of India and China. [3 Marks]

Answer:
1. Maternal Mortality Rate: It is very high in India as compared to China. For every 1 lakh births, 23 women lose their lives in China, whereas this figure is 103 in India.
2. Access to basic drinking water: It is fairly good in both countries. China leads with 97% coverage, followed by India at 93%. This shows that both nations have made significant progress in providing basic amenities.

Teacher's Note:
a) Always quote the figures from the table to support each comparison.
b) Each indicator carries one and a half marks; compare and also comment on what it shows.

(II) State the meaning of Special Economic Zones and its significance. [2 Marks]

Answer:
1. Meaning: A Special Economic Zone (SEZ) is a geographical region that has economic laws different from a country's typical economic laws.
2. Significance: SEZs play a crucial role in economic strategy by promoting investment, fostering development and facilitating trade.

Teacher's Note:
a) Meaning carries 1 mark and significance carries 1 mark.
b) China set up SEZs to attract foreign investors.

OR

(B) (I) Refer to the given image carefully:
Describe the indicated policy introduced by China in the late 1970s and its consequences. [3 Marks]

[Figure: A cartoon of a tired, sweating young boy pedalling a tricycle cart on a city road. A middle-aged man holding papers and a bag sits behind him, an elderly woman with a walking stick sits on top, and an elderly man and an elderly woman ride in the cart at the back.]

Answer:
1. The image depicts the consequence of the one-child norm introduced by China in the late 1970s. It was adopted by the Chinese government to control population growth.
2. This policy resulted in a decline in the sex ratio and created a demographic imbalance.
3. As a consequence, the elderly population of China is expected to surpass the younger population.

Teacher's Note:
a) The single child carrying many elders in the image shows the burden of an ageing population.
b) Name the policy first ("one-child norm") and then give its consequences.

(II) State any two challenges faced in the effective implementation of Great Leap Forward Campaign. [3 Marks]

Answer:
1. A severe drought caused havoc in China, killing about 30 million people.
2. When Russia had conflicts with China, it withdrew its professionals who had earlier been sent to China to help in the industrialisation process.

Teacher's Note:
a) The Great Leap Forward campaign was started in 1958 to industrialise China on a massive scale.
b) Each challenge carries one and a half marks.

34. Refer to the following text carefully:

India is adopting a multifaceted approach to mitigate global warming by diversifying its energy sources and enhancing access while also increasing the share of non-fossil fuels, improving energy efficiency, and promoting stability across its energy systems. India's energy transition is being pursued through a combination of initiatives across various sectors, including nuclear, solar, and wind energy, green hydrogen, battery storage, and critical minerals, which help to address both energy security and transition imperatives simultaneously.
India has already surpassed the goal of 50 per cent installed power capacity from non-fossil fuel sources, which stood at 51.93% at the end of December 2025, supported by record annual additions of renewable energy capacity. The progress in expanding non-fossil fuel-based power capacity has been supported by a wide variety of initiatives to boost renewable energy systems. Additionally, new measures are being taken to support other clean sources of energy such as the National Nuclear Mission, the Green Hydrogen Mission, and the Bio Energy Programme.
Source: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2219915&utm_source=ch… (adapted and modified)
On the basis of the given text and common understanding, answer the following questions:

(I) State the meaning of Global Warming. [1 Mark]

Answer: Global warming is a gradual increase in the average temperature of the earth's lower atmosphere as a result of the increase in greenhouse gases.

Teacher's Note:
a) Key words: "gradual increase", "average temperature", "lower atmosphere", "greenhouse gases".
b) Do not confuse global warming with ozone depletion.

(II) India has already achieved more than 50% of its installed power capacity from non-fossil fuel sources. Identify any two major government initiatives that support this transition. [1 Mark]

Answer: National Nuclear Mission and Green Hydrogen Mission.

Teacher's Note:
a) Each initiative carries half a mark; both are named in the passage.
b) The Bio Energy Programme is another initiative given in the text.

(III) Elaborate any two strategies adopted by India to ensure sustainable development. [4 Marks]

Answer:
1. Use of wind energy: In areas where wind speed is usually high, windmills can generate electricity without any adverse impact on the environment.
2. Although the initial cost of windmills is high, the benefits are such that the high cost is easily absorbed.
3. Use of solar energy: With the help of photovoltaic cells or solar panels, solar energy can be converted into electricity. This technique is free from pollution.
4. It is extremely useful for remote areas and for places where supply of power through the grid or power lines is either not possible or very costly.

Teacher's Note:
a) Each strategy carries 2 marks; name it and explain its benefit for the environment.
b) Use the keywords "non-conventional", "pollution-free" and "renewable".