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Answers |
1. (i) In the diagram, CD is the budget line. What does the point G represent?
- Combination of two goods on which a consumer spends her entire income
- Combination of two goods on which a consumer spends less than her money income
- Combination of two goods on which a consumer spends greater than her money income
- Consumer spends her entire money income either on Good A or Good B
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2. Combination of two goods on which a consumer spends less than her money income |
1. (ii) Abinav derives total utility of 11 units after consuming 4 mangoes and 9 utils after consuming 6 mangoes. What is his marginal utility on consuming the 6th mango?
- 1 util
- 21 utils
- 10 utils
- - 1 utils
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4. - 1 utils |
1. (iii) Law of Vairable proportions is NOT applicable when:
- All factor inputs increase in the same proportion.
- The time period is short.
- All the units of variable input are equally efficient.
- Technology remains constant.
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1. All factor inputs increase in the same proportion. |
1. (iv) Refer to the diagram and choose the correct statement:
- E 1 is the equilibrium point as MR = MC.
- E 1 and E 2 are equilibrium points as MR = MC.
- E 2 is the equilibrium point because MC > MR beyond this point.
- E 2 is the equilibrium point because MC < MR beyond this point.
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3. E 2 is the equilibrium point because MC > MR beyond this point. |
1. (v) Identify the correct statement with reference to the measures of money supply.
- M 3 includes M 2 .
- M 3 includes Time Deposits with commercial banks.
- M 1 includes Time Deposits with commercial banks.
- M 2 includes National Saving Certificates.
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1. M 3 includes M 2 . |
1. (vi) Suppose the total receipts are Rs. 1045 crore and the total payments are Rs. 1526 crore in the Balance of Payments account of India. In the above context, which one of the following can improve the Balance of Payments of India?
- Indian tourists buying souvenirs in foreign countries.
- Foreign Institutional Investor (FII) buying shares of Indian companies.
- Indian students joining foreign universities for higher education.
- Value of the US dollar falling against the Indian rupee.
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2. Foreign Institutional Investor (FII) buying shares of Indian companies. |
1. (vii) Which of the following scenarios correctly represents a Degressive tax system?
- Ruhi paid income tax in three consecutive years at the rate of 10% on her income of Rs. 10,000, 15% on her income of Rs. 20,000, and 15% on her income of Rs. 30,000.
- Goods and service tax on gold ornaments is 3% and 18% on fine dining in restaurants.
- Roshan was promoted to the position of Senior Manager and received a raise in his income. But he continued paying 10% of his income as tax.
- Suhana paid TDS at a higher rate on her increased interest income in the current year as compared to the previous year.
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3. Roshan was promoted to the position of Senior Manager and received a raise in his income. But he continued paying 10% of his income as tax. |
1. (viii) Choose the correction option - Assertion (A): Rise in price of burger at Burger Bliss raises the demand for burgers at Burger Heaven. Reason (R): There is a negative relationship between the demand for a good and the price of the complementary good.
- Both Assertion and Reason are true and Reason is the correct explanation for Assertion.
- Both Assertion and Reason are true and Reason is not the correct explanation for Assertion.
- Assertion is true and Reason is false.
- Both Assertion and Reason are false.
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2. Both Assertion and Reason are true and Reason is not the correct explanation for Assertion. |
1. (ix) Choose the correction option - Assertion (A): Commercial Banks can deposit their surplus funds with RBI. Reason (R): A high reverse repo rate enables commercial banks to earn an income.
- Both Assertion and Reason are true and Reason is the correct explanation for Assertion.
- Both Assertion and Reason are true and Reason is not the correct explanation for Assertion.
- Assertion is true and Reason is false.
- Both Assertion and Reason are false.
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1. Both Assertion and Reason are true and Reason is the correct explanation for Assertion. |
| 1. (x) With the help of a diagram, illustrate the effect of an increase in the price of the product shown in Image A on the demand for the product shown in Image B. |
Rightward shift of demand curve |
| 1. (xi) The long run average cost curve is U shaped due to the Law of Variable Proportions. Defend or refute the statement with a reason. |
Refute the statement.
This is because, the Long Run Average Cost (LRAC) curve is U-shaped due to economies and diseconomies of scale, not the Law of Variable Proportions (which applies only in the long run) |
| 1. (xii) Amit drew Rs. 50,000 from his savings to invest in his own business. He bought a zerox machine for Rs. 30,000 for his office the same day. Identify the explicit cost and the implicit cost in the above situation. |
Explicit Cost: Rs. 30,000
Implicit Cost: Rs. 50,000 |
| 1. (xiii) If Indian companies raise the wages in accordance with the Minimum Wage Act, it will lead to cost push inflation. Give a reason to support this statement. |
When minimum wages go up, businesses have to pay workers more. This increases the cost of making goods and services, which leads to higher prices. This is called cost-push inflation.
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| 1. (xiv) Sagarika wants to buy a car worth Rs. 10 lakhs. She has only Rs. 3 lakhs and plans to borrow the remaining amount from the bank. Name and briefly explain the selective credit control measure that enables Sagarika to get maximum loan from the bank. |
Margin Requirement: The RBI uses this rule to control how much money banks can lend against something valuable (collateral). If the margin requirement is low, banks can give bigger loans. This means Sagarika can borrow more money. |
| 1. (xv) Why does this supply of foreign exchange increase with an increase in the foreign exchange rate? |
When the foreign exchange rate rises, more foreign money flows into the country. This is because local goods and services become cheaper for foreign buyers, leading to higher exports. At the same time, foreign investors find the domestic market more attractive, encouraging them to invest more. As a result, the supply of foreign exchange increases.
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| 1. (xvi) What is meant by primary deficit? |
The primary deficit is calculated by subtracting interest payments on previous borrowings from the fiscal deficit.
Here is the Formula:
Primary Deficit = Fiscal Deficit – Interest Payments
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