CBSE Class 12 Economics Important Case Study Based Questions for 2023 Board Exams

CBSE Class 12 Economics Important Case Study Based Questions: As per the CBSE board exam date sheet, the Class 12 Economics 2023 paper has been scheduled for March 17, 2023. The exam will consist of a range of subjective and objective questions covering the CBSE Class 12 Economics 2022-23 syllabus. In order to obtain maximum marks on these questions, students should have a thorough understanding of the basics, terminologies, and equations used in Economics. To assist students in preparing effectively for their upcoming Class 12 Economics exam, we have compiled a list of importantEconomics case study questions. These MCQs have been carefully created, chosen and compiled by subject experts based on the latest exam pattern and revised syllabus of CBSE Class 12 Economics. The answers to the important Case Study Questions are also attached.

Important Case Study Based Questions for CBSE Class 12 Economics Board Exam 2023

Read the following case study paragraph carefully and Answer the questions on the basis of the same.

Q1 The central bank of India i.e. Reserve Bank of India, is the apex institution that control the entire financial market. It’s one of the major functions is to maintain the reserve of foreign

exchange. Also, it intervenes in the foreign exchange market to stabilise the excessive fluctuations in the foreign exchange rate.

In other words, it is the central bank’s job to control a country’s economy through monetary policy; if the economy is moving slowly or going backward, there are steps that central bank can take to boost the economy. These steps, whether they are asset purchases or printing more money, all Involve injecting more cash into the economy. The simple supply and demand economic projection occur and currency will devalue.

When the opposite occurs, and the economy is growing, the central bank will use various methods to keep that growth steady and in-line with other economic factors such as wages and prices.

Whatever the central bank does or in fact don’t do, will affect the currency of that country.

Sometimes, it is within the central bank’s interest to purposefully effect the value of a currency.

For example, if the economy is heavily reliant on exports and their currency value becomes too high, importers of that country’s commodities will seek cheaper supply; hence directly effecting the economy.

1 Which of the following tools are used by the central bank to control the flow of money in domestic economy?

(a) Fiscal tools (b) Quantitative monetary tools

(c) Qualitative monetary tools (d) Both (b) and (c)

2 Dear money policy of central bank, which is used to keep the growth steady and in-line with other economic factors, refers to

1. a) Tighten the money supply in the economy
2. b) Ease the money supply in the economy
3. c) Allow commercial banks to work under less strict environment
4. d) Both (b) and (c)

3 Which of the following steps should be taken by the central bank if there is an excessive rise in the foreign exchange rate?

(a) Supply foreign exchange from its stock

(b) Demand more of other foreign exchange

(c) Not intervene in the market as the exchange rate is determined by the market forces

(d) Help central government to stabilize the foreign exchange rate.

Answer: 

1(d) Both (b) and (c)

2(a) Tighten the money supply in the economy

3(a) Supply foreign exchange from its stock

Q2 Changes in aggregate demand bring about changes in the level of output, employment, income, and price. These changes are generally cyclical in nature. These changes, more generally, follow a cycle of four different stages namely boom, recession, depression and recovery. The cyclical nature of economic activity is known as trade cycle or business cycle. Boom is a stage of economic activity characterized by rising prices, rising employment, rising purchasing power.

During the boom period economy may get overheated, if it so happens, the monetary authorities, the financial institutions begin to play cautiously. There may be cuts in investment, resulting in cuts in employment; decline in purchasing power, economy may be caught in a web of pessimism, leads to recession. During this stage, if effective corrective measures are not undertaken, the economy may find itself caught in the whirlpool of depression. It is a stage where investment, employment, output touches the bottom. As the economy moves out of depression, it enters the phase of recovery. Keynesian diagnosis of trade cycles is given in terms of changes in aggregate demand. These are ‘excess demand’ and ‘deficient demand ‘that cause trade cycle.

1. During the time of ‘excess demand’, Govt. should ……………… the public expenditure.
2. a) Reduce b) increase c) unchanged d) none of these.

Answer: Reduce

2. Investment depends on: a) Supply b) income c) saving d) Both (a) and (c)

Answer: Income.

Q3 In the modern world, govt. aims at maximizing the welfare of the people and the country. It

requires various infrastructure and economic welfare activities. These activities require huge govt. spending through appropriate planning and policy. Budget provides a solution to all these concerns. Budget is prepared by the government at all levels.

Estimated expenditure and receipts are planned as per the objectives of the government. In India, budget is prepared by the parliament on such a day as the president may direct. The parliament approves the budget before it can be implemented. The receipts and expenditures as shown in the budget are only the estimated values for the upcoming fiscal year, and not the actual figure.

1 Which of the following is not an objective of the govt. budget?

1. a) Reallocation of resources.
2. b) Re distribution of income
3. c) Reducing expenditure
4. d) Economic stability.

Answer: c) Reducing expenditure

2 Govt. budget is a statement of actual receipts and payments of the govt. (True/False)

1. a) True
2. b) False

Answer: False

Q4 India’s balance of payments position improved dramatically in 2013-14 particularly in the last three quarters. this moved in large part to measure taken by the government and the Reserve Bank of India (RBI) and eat some part to the overall macro-economic slowdown that fed into the external sector. current account deficit (CAD) declined sharply from a record high of U.S. dollar 88.2 billion (4.7% of GDP) in 2012 -1/3 to U.S. dollars 32.4 billion (1.7% of GDP) in 2013 -14. After staying at perilously unsustainable levels off well over 4.0 percentage of GDP in 2011 -12 and 2012 -13, the improvement in BOP position is a welcome relief, and there is need to sustain the position going forward. This is because even as CAD came down, net capital flows moderated sharply from U.S. dollars 92.0 billion in 2012 -13 do U.S. dollar 47.9 billion in 2013-14, that two after a special swap window of

The RBI under the nonresident Indian (NRI) scheme / overseas borrowings of banks alone yielded U.S. dollar 3 4.0 billion. This led to some increase in the level of external debt, but it has remained at the manageable levels. the large depreciation of the rupee during the course of the year, note with standing sizable accretion to reserve in 2013 – 14, could partly be attributed to frictional forces and partly to the role of expectations in the forex market. the rupiah has stabilized the recently, reflecting an overall sense of confidence in the forex market as in the other financial markets of a change for better economic

prospects there is a need to nurture and build upon this optimism through creation of an enabling environment for investment inflows so as to sustain the external position in an as yet uncertain global milieu. ——— The Hindu, archives

1 External debt is recorded at:

1. a) credit, capital account
2. b) debit, capital account
3. c) credit, current account
4. d) debit, current account

2 Money sent by NRI to their families in India included in:

1. a) credit, capital account
2. b) debit, capital account
3. c) credit, current account
4. d) debit, current account

3 Which of the following is not a component of BOP?

1. a) current account
2. b) revenue account
3. c) capital account
4. d) official reserves

4 Positive balance of net capital flow shows:

1. a) outward flow of foreign exchange
2. b) inward flow of foreign exchange
3. c) decrease in the level of external debt
4. d) decrease in future claims

Answers: 1.b 2. c 3. b 4. d

Q5 The green revolution for the third agricultural revolution is the set of research technology

e-transfer initiatives earring between GNE E and the late 1960 that increased agricultural

production worldwide beginning most markedly in the late 1960 the initiative resulted in

the adoption of new technologies including high yield varieties of CSR rules of cells

especially does wheat and rice it was associated with chemical fertilizers agrochemicals

and controlled water supply and newer methods of cultivation including machine isolation

National bank for agriculture and rural development is and apex development finance

institution fully owned by government of India the bank has been entrusted with Martyrs

concerning policy planning and operations in the field of credit for agriculture and other

economic activities in rural areas in India.

1 Who among the following is known as the father of green revolution

(a) Dr. M S Swaminathan

(b) Dadabhai Naoroji

(c) Vikram Sarabhai

(d) all of these

2 Green revolution is also known as ………………

(a) Golden revolution

(b) milk revolution

(c) Wheat revolution

(d) None of this

3 Which of the following institutions were setup as the apex body in rural areas to support the small farmers in the adoption of modern farming methods?

(a) RRB

(b) SIDBI

(c) RBI

(d) NABARD

4 Green revolution was the …………… set of agricultural reforms brought in India

(a) First

(b) Second

(c) Third

(d) fourth

Answer: 1 (a) 2 (c) 3 (d) 4(c)

Q6 New Economic Policy of India was launched in the year 1991 under the leadership of P.

1991. Narasimha Rao. This policy opened the door of the India Economy for the global exposure for the first time. In this New Economic Policy P. V. Narasimha Rao governmentreduced the import duties, opened reserved sector for the private players, devalued the Indian currency to increase the export. This is also known as the LPG Model of growth. New Economic Policy refers to economic liberalization or relaxation in the import tariffs, deregulation of markets or opening the markets for private and foreign players, and reduction of taxes to expand the economic wings of the country. Former Prime Minister Manmohan Singh is considered to be the father of New Economic Policy (NEP) of India. Manmohan Singh introduced the NEP on July 24,1991. Main Objectives of New Economic Policy – 1991, July 24 The main objectives behind the launching of the New Economic policy (NEP) in 1991 by the union Finance Minister Dr. Manmohan Singh are stated as follows:

The main objective was to plunge Indian Economy in to the arena of ‘Globalization and to give it a new thrust on market orientation. The NEP intended to bring down the rate of inflation.

1 New Economic Policy of India was launched in the year 1991 under the

leadership of ……………… (choose the correct alternative))

1. P. V. Narasimha Rao
2. Atal Bihari Bajpayi
3. Sharad Pawar
4. None of these

Answer: A

2 ……………………………. is also known as the LPG Model of growth. ((choose

the correct alternative)) (New Economic Policy / New Education Policy)

Answer: New Economic Policy

3 State whether the given statement is true or false:

Former Prime Minister Manmohan Singh is considered to be the father of New Economic Policy (NEP) of India. ((choose the correct alternative))

True / False

Answer: True

Q7 Both forms of capital formation are the outcomes of conscious investment decisions. The decision regarding investment in physical capital is taken on the basis of one’s knowledge in this regard. The ownership of physical capital is the outcome of the conscious decision of the owner the physical capital formation is mainly an economic and technical process.

Human capital formation takes place in one’s life when she/he is unable to decide whether it would maximize her/his earnings. Children are given different types of school education and health care facilities by their parents and society. Moreover, the human capital formation at this stage is dependent upon the already formed human capital at the school level. Human capital formation is partly a social process and partly a conscious decision of the possessor of the human capital.

1 Which of the following does not correctly differentiate between the physical and human capital?

1. a) Human capital is intangible whereas physical capital is tangible.
2. b) Human capital can cope up with the changing technology whereas physical cannot.
3. c) Human capital generates both personal and societal benefits whereas physical capital generates only personal benefit.
4. d) Human capital gets obsolete with time whereas physical capital does not.

Answer: – d) Human capital gets obsolete with time whereas physical capital does not.

2. In the context of the paragraph, it can be argued that human capital depreciates faster than the physical capital. The given statement is:
3. a) True
4. b) false
5. c) Partially true
6. d) can’t comment due to lack of proper estimation mechanism

Answer: b) false

3. Machines and industrial tools are examples of _
4. a) Physical capital
5. b) Human capital
6. c) Both physical and human capital
7. d) Natural capital

Answer: a) Physical capital

4. Investment in education by parents is the same as_______
5. a) Investment in intermediate goods by companies
6. b) Investment in CSR activity by companies
7. c) Investment in capital goods by companies
8. d) None of the above

Answer: – c) Investment in capital goods by companies

Q8 The central government will spend Rs. 9800 crores on livestock development over the next five years in a bid to leverage almost Rs. 55000 crore of outside investment into the Animal Husbandry Sector. It would do this by merging a slew of schemes of the Department of Animal Husbandry and Dairying into three main programmes, focused on indigenous cows and dairy development, livestock health and infrastructure development, an official statement said. The Cabinet Committee on Economic Affairs approved the implementation of the special livestock sector package by revising and realigning the various components of the existing schemes in order to boost growth and make animal husbandry more remunerative for the 10 crore farmers engaged in it.

1) Livestock production provides ————- for the family without disrupting other food producing activities

(a)Increased stability in income 

(b) food security

(c)transport and fuel 

(d) all of these

Answer: (d) all of these

2) The central bank undertakes to invest on livestock development in ———– (horticulture/ animal husbandry) sector

Answer: animal husbandry

3) State one limitation of livestock sector in India

Answer: The livestock productivity is quite low as compared to other countries

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Important resources for Class 12 Economics Board Exam 2023