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General Instructions:

(i) All questions in both sections are compulsory. However, there is internal choice in some questions.

(ii) Marks for questions are indicated against each question.

(iii) Question No.1-5 and 16-20 are very short answer questions carrying 1 mark each. They are required to be answered in one sentence.

(iv) Question No.6-8 and 21-23 are short answer questions carrying 3 marks each. Answers to them should not normally exceed 60 words each.

(v) Question No.9-11 and 24-26 are also short answer questions carrying 4 marks each. Answers to them should not normally exceed 70 words each.

(vi) Question No.12-15 and 27-30 are long answer questions carrying 6 marks each. Answers to them should not normally exceed 100 words each.

(vii) Answers should be brief and to the point and the above word limit be adhered to as far as possible.

Question 1
• Q1

Any statement about demand for a good is considered complete only when the following is/are mentioned in it (Choose the correct alternative):  (1)

(a) Price of the good

(b) Quantity of the good

(c) Period of time

(d) All of the above

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• Q2

Demand for a good is termed inelastic through the expenditure approach when if (Choose the correct alternative)  (1)

(a) Price of the good falls, expenditure on it rises

(b) Price of the good falls, expenditure on it falls

(c) Price of the good falls, expenditure on it remains unchanged

(d) Price of the good rises, expenditure on it falls

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• Q3

Define indifference curve.  (1)

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• Q4

A seller cannot influence the market price under (Choose the correct alternative)  (1)

(a) Perfect competition

(b) Monopoly

(c) Monopolistic competition

(d) All of the above

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• Q5

State any one feature of monopolistic competition.  (1)

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• Q6

Give the meaning and characteristics of production possibility frontier.  (3)

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• Q7

Explain the problem of "how to produce".  (3)

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• Q8

Distinguish between 'increase in demand' and 'increase in quantity demanded' of a good.  (3)

OR

Explain the meaning of 'Budget set' and 'Budget line'.  (3)

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• Q9

Explain with the help of a numerical example, the meaning of diminishing marginal rate of substitution.  (4)

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• Q10

Define market supply. Explain the factor 'input prices' that can cause a change in supply. (4)

OR

Give the behaviour of marginal product and total product as more and more units of only one input are employed while keeping other inputs as constant. (4)

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• Q11

Explain "perfect knowledge about the markets" feature of perfect competition. (4)

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• Q12

When the price of a good rises from Rs 10 per unit to Rs 12 per unit, its quantity demanded falls by 20 percent. Calculate its price elasticity of demand. How much would be the percentage change in its quantity demanded, if the price rises from Rs 10 per unit to Rs 13 per unit?   (6)

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• Q13

Complete the following table :    (6)

 Output (units) Average Fixed Cost (Rs) Marginal Cost (Rs) Average Variable Cost (Rs) Average Cost (Rs) 1 60 20 .... .... 2 .... .... 19 .... 3 20 .... 18 .... 4 .... 18 .... .... 5 12 .... .... 31

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• Q14

From the following total cost and total revenue schedule of a firm, find out the level of output, using marginal cost and marginal revenue approach, at which the firm would be in equilibrium. Give reasons for your answer.   (6)

 Output (units) Total Revenue (Rs) Total Cost (Rs) 1 10 8 2 18 15 3 24 21 4 28 25 5 30 33

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• Q15

Distinguish between perfect oligopoly and imperfect oligopoly. Also explain the "interdependence between the firms" feature of oligopoly. (6)

OR

Explain the meaning of excess demand and excess supply with the help of a schedule. Explain their effect on equilibrium price. (6)

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• Q16

Demand deposits include (Choose the correct alternative):  (1)

(a) Saving account deposits and fixed deposits

(b) Saving account deposits and current account deposits

(c) Current account deposits and fixed deposits

(d) All types of deposits

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• Q17

Define marginal propensity to consume.  (1)

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• Q18

If the marginal propensity to consume is greater than marginal propensity to save, the value of the multiplier will be (Choose the correct alternative)  (1)

(a) greater than 2

(b) less than 2

(c) equal to 2

(d) equal to 5

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• Q19

Define Government budget.  (1)

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• Q20

What is meant by depreciation of domestic currency?  (1)

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• Q21

Explain with the help of an example, the basis of classifying goods into final goods and intermediate goods. (3)

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• Q22

Explain "difficulty in storing wealth" problem faced in the barter system of exchange.  (3)

OR

Explain the "medium of exchange" function of money.  (3)

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• Q23

Distinguish between direct taxes and indirect taxes. Give an example of each.  (3)

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• Q24

Explain the "bankers' bank" function of the central bank.  (4)

OR

Explain the process of credit creation by commercial banks.  (4)

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• Q25

An economy is in equilibrium. From the following data, calculate the marginal propensity to save :  (4)

(a) Income = 10,000

(b) Autonomous consumption = 500

(c) Consumption expenditure = 8,000

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• Q26

Explain how government budget can be helpful in bringing economic stabilization in the economy.  (4)

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• Q27

Distinguish (a) between current account and capital account, and (b) between autonomous transactions and accommodating transactions of balance of payments account.  (6)

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• Q28

Explain the precautions that should be taken while estimating national income by expenditure method.  (6)

OR

Will the following be included in the domestic product of India? Give reasons for your answer.  (6)

(a) Profits earned by foreign companies in India

(b) Salaries of Indians working in the Russian Embassy in India

(c) Profits earned by a branch of State Bank of India in Japan

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• Q29

Calculate (a) National Income, and (b) Net National Disposable Income :  (6)

 (Rs in crores) (i) Compensation of employees 2,000 (ii) Rent 400 (iii) Profit 900 (iv) Dividend 100 (v) Interest 500 (vi) Mixed income of self-employed 7,000 (vii) Net factor income to abrorad 50 (viii) Net exports 60 (ix) Net indirect taxes 300 (x) Depreciation 150 (xi) Net current transfers to abroad 30

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• Q30

Given a consumption curve, outline the steps required to be taken in deriving a saving curve from it. Use diagram.

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