Please refer to Sample Paper Class 12 Economics Term 1 Set A with solutions provided below. We have provided CBSE Sample Papers for Class 12 Economics as per the latest paper pattern and examination guidelines for Standard 12 Economics issued by CBSE for the current academic year. The below provided Sample Guess paper will help you to practice and understand what type of questions can be expected in the Class 12 Economics exam.

CBSE Sample Paper Class 12 Economics for Term 1 Set B

Section A

1. Which of the following was the feature on Indian economy on the eve of independence?
(a) Poor and backward
(b) Modern
(c) Self-reliant
(d) None of these

2. High birth rate and low death rate is a feature of …… phase of demographic profile.
(a) first
(b) second
(c) third
(d) None of these

3. Read the following statements carefully and choose the correct alternative from the following.
Statement I Taxes are legal payments but not compulsory payments.
Statement II Anyone who doesn’t pay any tax is not eligible to use public services
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

4. ……… was replaced by WTO as the governing body for regulating international trade.
(a) IMF
(b) GTTA
(c) GATT
(d) IBRD

5. Invisible balance can be calculated as ……… .
(a) Export – Imports of services
(b) Trade balance + Balance of non-factor service
(c) Balance of non-factor service + Balance of transfers
(d) Exports–Imports + Balance of factor services

6. ……… can be used to deal with the situation of hyperinflation in the economy at a given point of time by the government.
(a) Balanced budget
(b) Deficit budget
(c) Surplus budget
(d) None of these

7. Which of the following is/are true about liberalism?
(a) It promotes economic development
(b) It leads to political liberty
(c) It gives freedom of private enterprises
(d) All of these

8. India’s growth in terms of HDI has shown dismal trends during the recent past. ……… can be attributed for the same.
(a) communal feelings
(b) lack of resources
(c) illiteracy
(d) All of these

9. In agriculture, due to long time gap between crop sowing and realisation of income, farmers are in strong need for credit. Various needs for loans of farmers can be categorised as under
(a) short-term credit
(b) medium-term credit
(c) long-term credit
(d) All of these

10. The literacy rate during the colonial rule was very low. Literacy rate is a part of ……… of the country.
(a) infrastructure
(b) demographic profile
(c) occupational structure
(d) None of these

11. Which one of the following is used as a fraction to multiply currency in the economy by the commercial banks?
(a)M = 1/LRR
(b) M = 1/SLR
(c) M = 1/CRR
(d) None of these

12. The current account of BoP excludes items related to ……… .
(a) financial assets
(b) borrowing from foreign countries
(c) foreign investment
(d) All of these

13. Choose the incorrect statement from given below.
(a) Currency held by public is most liquid form of money
(b) The number of times a unit of money change hands is known a velocity of money
(c) Commerical banks are financial intermediaries which to earn profit
(d) M1 is the least liquid measure of money supply in India

14. In order to fulfill the ……… objective of planning, Indian policy makers opted for a closed macroeconomic model during the initial phase of industrialisation.
(a) growth
(b) modernisation
(c) self-reliance
(d) equity

15. Indian banking works on the system called fractional reserve, in which every commercial bank is required to keep certain portion of total deposits as reserves.
Which of the following ratios are part of the reserve requirements?
(a) CRR
(b) SLR
(c) Both (a) and (b)
(d) None of these

16. Read the following statements carefully and choose the correct alternative from the following.
Statement I Poverty and unemployment leads to loss of human capital.
Statement II Human capital creates a virtuous cycle which improve the living conditions of each coming generations.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

17. The number of persons employed from the labour force per hundred persons is termed as ……… .
(a) Worker population ratio
(b) Headcount ratio
(c) Capital gain ratio
(d) Legal reserve ratio

18. If `75 are required to buy 1$, instead of `78, it represents
(a) domestic currency has appreciated
(b) domestic currency has depreciated
(c) rupee value of import bill will increase
(d) Both (b) and (c)

19. Occasional intervention by central bank in the foreign exchange market to influence the exchange rate is known as ……… .
(a) Managed floating rate
(b) Hedging
(c) Appreciation
(d) Depreciation

20. Write the correct pair.
Column I                                                             Column II
A. Export and import of goods (i) Accommodating item
B. Foreign exchange reserve    (ii) Autonomous item
C. Balance of trade                     (iii) Difference between the export and import of visible items
D. Unilateral transfers                 (iv) Factor incomes in the form of interest, rent etc
Codes
(a) A-(i)
(b) B-(ii)
(c) C-(iii)
(d) D-(iv)

21. Choose the correct statement from given below.
(a) NITI Aayog started functioning from 1st January, 2018.
(b) Before 1921, India was in the second stage of demographic profile.
(c) Opening of Suez Canal by colonial government, reduced the cost of production and made Indian market accessible.
(d) Tata Iron and Steel Corporation was set-up in 1807.

22. Goods and Services Tax was introduced in 2017 as reform in the tax structure of the country. Burden of GST is ……… onto those who are not meant for it.
(a) non-transferable
(b) transferable
(c) Either (a) or (b)
(d) Neither (a) nor (b)

23. Central bank of the country is completely responsible of controlling the money supply in the economy in every situation. One such policy is dear money policy. Dear money policy of central bank is used to keep the growth steady and in-line with other economic factors. This refers to
(a) Tighten the money supply in the economy
(b) Ease the money supply in the economy
(c) Allow commercial banks to work under less strict environment
(d) Both (b) and (c)

24. ‘Above the line items’ of BoP are undertaken with the motive of ……… .
(a) balancing BoP
(b) social welfare
(c) profit motive
(d) All of these

Section B

25. Assertion (A) Adoption of new technology in the production of goods and services to increase the output is called modernisation.
Reason (R) Modernisation does not refer only to the use of technology but also to change in social outlook.
Alternatives
(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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

26. Demand deposits have which of the following features?
(a) Cheque able deposits
(b) Deposits which can be withdrawn on demand
(c) Fixed deposits for a specific period
(d) Both (a) and (b)

27. Assertion (A) Under the IPR 1956, the private sector was kept under state control through licensing system.
Reason (R) Licencing policy led to controlled growth of private sector enterprises.
Alternatives
(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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

28. Identify the correct sequence of alternatives given in column II by matching them with respective terms in column I.

Codes
      A   B   C          D   A    B   C  D
(a) (ii) (i) (iv) (iii) (b) (i) (iii) (ii) (iv)
(c) (ii) (iv) (i) (iii) (d) (iii) (ii) (iv) (i)

29. Choose the correct statement from given below.
(a) Railways was introduced for easy mobilisation of goods and passengers in India.
(b) Colonial government developed major ports for easy transportation of goods from India to Britain.
(c) Colonial government focused on development of all reason roads in every part of the country.
(d) All of the above

30. Prior to independence, farmers, while selling their produce to traders, suffered from faulty weighing and manipulation of accounts. In order to protect the farmers from this post-independence, which of the following measures were introduced?
(a) Alternative marketing channel
(b) Self-help groups
(c) Agricultural marketing
(d) All of these

31. Assertion (A) Foreign trade creates an opportunity for the producers to reach beyond the domestic markets.
Reason (R) Expansion of trade beyond domestic boarders leads to increase in profit margin of the firms involved in trade.
Alternatives
(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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

32. Choose the correct statement from given below.
(a) Social infrastructure directly contributes in the production activities.
(b) ‘Jail Cost of Living’ index was introduced by Amartya Sen.
(c) Poverty line of rural areas has been set below poverty line of urban areas.
(d) India’s infant mortality rate is higher than that of Bangladesh.

33. In a market economy, central problem is dealt by
(a) market forces of demand and supply
(b) planning by capitalist
(c) invisible hands
(d) Both (a) and (c)

34. Assertion (A) Rapid economic growth is one way to solve the problem of poverty and not the only way of doing so.
Reason (R) Growth of GDP indicates nothing about the distribution of income among the people of the country.
Alternatives
(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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

35. India occupies ……… place in milk production in the world.
(a) first
(b) second
(c) third
(d) fourth

36. Read the following statements carefully and choose the correct alternative from the following.
Statement I Present monetary system was introduced during the colonial rule.
Statement II India learned effective administration from the British government.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

37. Write the correct pair.
Column I                                     Column II
A. Non-tariff barriers           (i) Imposed by WTO
B. Bank rate                         (ii) Also known as discount rate
C. Custom duties               (iii) Post 1991, maximum rate of duty is 50%
Codes
(a) A – (i)
(b) B – (ii)
(c) C – (iii)
(d) All of these

38. Assertion (A) Foreign exchange reserves are considered as a liability for the economy.
Reason (R) The currency issued by the central bank is its monetary liability.
Alternatives
(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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

39. Assertion (A) Central government is responsible for the provision of public goods in the economy.
Reason (R) Public goods once provided in the economy, no one can be denied its consumption.
Alternatives
(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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

40. Read the following statements carefully and choose the correct alternative from the following.
Statement I Absolute poverty and human poverty are one or the same thing.
Statement II Poverty measures in India do not indicate the condition of poor.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

41. Observe the picture given below.

Which of the following correctly complete the flow chart in the order from left to right?
(a) Capital account, Revenue account
(b) Capital budget, Revenue budget
(c) Revenue budget, Capital budget
(d) Revenue account, Capital account.

42. Assertion (A) Monetary policy of RBI is a part of central bank’s function as banker to the government.
Reason (R) Central bank as a banker to the government meets all banking needs of the government.
Alternatives
(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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

43. Agriculture marketing does not comprised of ……… .
(a) transportation of produce to the market place for sale.
(b) grading of the produce according to the quality
(c) storage of the produce for sale in future
(d) credit taken to meet expenditure on agriculture

44. Read the following statements carefully and choose the correct alternative from the following.
Statement I Owing to the new economic reforms, Indian economy became more vibrant.
Statement II Economic growth accelerated after the economic reforms of 1990s.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

45. ……… is used to measure the relative poverty in the country.
(a) Poverty line
(b) Gini coefficient
(c) Both (a) and
(b) (d) None of these

46. Assertion (A) Balance of payments account always balances in accounting terms.
Reason (R) When the balance of all the accounts of BoP comes to be zero, it is said to be in equilibrium.
Alternatives
(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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

47. MGNREGA guarantees ………… days of guaranteed employment in a calendar year.
(a) 100
(b) 120
(c) 150
(d) 200

48. Assertion (A) Managed floating exchange rate system brings stability in the market as well as reduces the burden of the central bank.
Reason (R) Determination of exchange rate by market forces and check by the central bank is the key feature of dirty floating exchange rate.
Alternatives
(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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

Section C

Direction : – Read the following case study and answer questions 49 to 54 on the basis of the same.
India has plunged into recession for the first time in nearly a quarter of a century as the pandemic continues to weigh heavily on Asia’s third biggest economy, which economists warn will struggle to recover from the slump.
Official data published on Friday showed gross domestic product for the July-September quarter fell by 7.5% compared to the same period last year, when the economy was growing by more than 4%. That follows a record drop of nearly 24% in GDP in the April-June period, the first quarter of India’s fiscal year.
“With a view to contain the spread of the Covid-19 pandemic, restrictions were imposed on the economic activities not deemed essential during the first quarter,” the Indian Ministry of Statistics said in a statement on Friday. “Though the restrictions have been gradually lifted, there has been an impact on the economic activities.” While manufacturing returned to growth, the services sector suffered a second consecutive double-digit decline. Government consumption also fell sharply in part because of an “inadequate fiscal response to the crisis,” said senior India economist at capital economics, Shilan Shah.

49. India has plunged into recession for the first time in nearly a quarter of a century as the pandemic continues to weigh heavily on Asia’s third biggest economy. Which of the following fiscal measures can be taken to deal with this situation?
(a) Increase in tax rate
(b) Decrease in subsidies
(c) Increase government spendings
(d) Both (a) and (c)

50. The restrictions in the economic activities during the lockdown has led to
(a) fall in GDP
(b) fall in number of tax payers
(c) Both (a) and (b)
(d) None of these

51. Assertion (A) The covid-19 pandemic have intensified the fiscal deficit of India.
Reason (R) Government announced many relief packages during the lockdown to support the living of people, all these are unplanned expenditures.
Alternatives
(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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

52. Read the following statements carefully and choose the correct alternative from the following.
Statement I Inadequate fiscal response led to the economic crisis during the pandemic.
Statement II Fiscal discipline cannot be maintained in a situation of an unforeseen circumstances.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

53. Which of the following sectors of the Indian economy suffered a decline in the growth post the lockdown rules were eased?
(a) Manufacturing
(b) Services
(c) Both (a) and (b)
(d) Neither (a) nor (b)

54. Government consumption expenditures ……… post the lockdowns.
(a) increased
(b) decreased
(c) remain constant
(d) None of these

Direction : – Read the following case study and answer questions 55 to 60 on the basis of the same.
Diversification includes two aspects – one relates to change in cropping pattern and the other relates to a shift of workforce from agriculture to other allied activities like livestock, poultry, fisheries etc. and non-agriculture sector. The need for diversification arises from the fact that there is greater risk in depending exclusively on farming for livelihood.
Diversification towards new areas is necessary not only to reduce the risk from agriculture sector but also to provide productive sustainable livelihood options to rural people. Much of the agricultural employment activities are concentrated in the Kharif season. But during the Rabi season, in areas where there are inadequate irrigation facilities, it becomes difficult to find gainful employment. Therefore, expansion into other sectors is essential to provide supplementary gainful employment and in realising higher levels of income for rural people to overcome poverty and other tribulations.

55. Diversification helps in increasing farmers income. Diversification in agriculture is comprised of
(a) change from mono-cropping to multiple-cropping
(b) scientific crop rotation
(c) shift to non-farm activities
(d) All of the above

56. Read the following statements carefully and choose the correct alternative from the following.
Statement I Diversification towards new areas helps in reducing crop failure.
Statement II People in rural areas do not prefer diversification due to lack of awareness.
Alternatives
(a) Statement I is correct and Statement II is incorrect
(b) Statement II is correct and Statement I is incorrect
(c) Both the statements are correct
(d) Both the statements are incorrect

57. Assertion (A) Diversification helps in sustaining the income of the farmers in rural areas.
Reason (R) Non-farm activities are not seasonal and gives employment throughout the year.
Alternatives
(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 false, but Reason (R) is true
(d) Assertion (A) is true, but Reason (R) is false

58. Livestock comes under the category of ……… activities.
(a) farm
(b) allied
(c) diversification
(d) Both (b) and (c)

59. It is difficult to find gainful employment in which of the following seasons due to inadequate irrigation facilities?
(a) Rabi
(b) Kharif
(c) Zaid
(d) None of these

60. Agriculture is the main source of occupation even today, which of the following challenges of Indian economy can be addressed by opting for diversification in agriculture?
(a) Poverty
(b) Unemployment
(c) Both (a) and (b)
(d) None of these