Eco MS 2 CSSC W
Eco MS 2 CSSC W
Eco MS 2 CSSC W
ECONOMICS (030)
SECTION – A
MACRO ECONOMICS
6. (d) 0.6
(OR)
(c) ₹800 crores
7. (a) Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct
explanation of Assertion (A).
8. (c) In the Managed floating exchange rate system, the central bank intervenes
to moderate exchange rate fluctuations.
14. The Central Bank acts as a banker and as an agent to the government in various
respects: (4)
a) The Central Bank accepts receipts and makes payment for the
government and carries out exchange, remittance and other banking
operations.
b) It provides short-term credit to the government.
c) It provides foreign exchange to the government to repay external debt.
d) It advises the government on banking and financial matters.
15. (1 ½ )
The situation of deficient demand arises when planned aggregate expenditure falls
short of aggregate supply at the full employment level. It gives rise to deflationary
gap. Deflationary gap is the gap by which actual aggregate demand falls short of
aggregate demand required to establish full employment equilibrium. (1 ½ )
(4)
16. a) The Government’s objective of reducing the inequalities in income and wealth is
fulfilled. Government can impose higher rate of tax on income of the rich and on
the goods consumed by the rich. This will bring down disposable income of the
rich. The amount so collected can be spent on providing free services, like
education, subsidized food to the poor people. This will increase the disposable
income of the poor reducing the gap between rich and poor. (3)
b) Capital receipts: It refers to those monetary receipts which either create liability
for the government or cause reduction in the assets of the government. Sources of
capital receipts are: (3)
* Borrowings: Government borrows from the market, i.e., from the public. It
also borrows from the central bank, i.e., Reserve Bank of India in India, and
from foreign governments and bodies. Raising of funds through borrowing
leads to increase in the liabilities of the government.
* Recovery of loans: Government grants various loans to state governments
or union territories. Recovery of such loans is a capital receipt as it
reduces the assets of the government.
* Disinvestment: It refers to the act of selling a part or the whole of shares
of selected public sector undertakings held by the government. They are
termed as capital receipts as they reduce the assets of the government.
b) Externalities also have impact on welfare but are not taken into account in
GDP. Some of the activities bring positive benefits and negative harm to
mass of people without any monetary exchange. (3)
(E. g) Construction of a flyover or a highway reduces transport cost and
journey time of its users who have not contributed anything towards its
cost. Expenditure on construction is included in GDP and positive
externalities flowing from it.
Similarly, GDP also does not take into account negative externalities.
Factories produce goods but at the same time create pollution of water and
air. The pollution harms people. The factories are not required to pay
anything for harming people. Producing goods increases welfare but
creating pollution reduces welfare.
(OR)
Do not include expenditure on second hand goods, as it has already been included
in the national income of the year, they were bought/sold for the first time
SECTION – B
IED
18. (c) To stop the use of low denomination notes for terrorists activities. (1)
(OR)
(c) Both statements 1 and 2 are true
(OR)
b) Use of thermal power
23. (b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the (1)
correct explanation of Assertion (A).
29. Co-operative Credit Societies – This source of credit is the most economical and
important source of rural credit. It was set up with the aim of facilitating the
complete credit needs for small and medium farmers. (3)
Commercial Banks - Earlier, these banks were only received deposits from the
urban population and issued loans only for trade and industry. They generally
neglected agriculture and rural industries because by nature agriculture is a high-
risk venture. However, today these banks give both direct and indirect finance to
agriculture.
Regional Rural Banks – Government initiated Regional Rural Bank was set up
to examine the specific needs of landless workers, small and marginal farmers and
rural poor.
Land Development Bank – It essentially gives farmers a long-term loan option
upon the mortgage of their land at low-interest rates, over a period of 15 to 20
years. These type of loans are usually taken if the farmers have some land
developments work or digging of wells.
(OR)
i) Regulation of markets was the first step to create orderly and transparent (3)
marketing conditions. This policy benefits farmers as well as consumers.
ii) Provision of physical infrastructure facilities like roads, railways,
warehouses, godowns, cold storages and processing units.
iii) Cooperative marketing, in realizing fair prices for farmers’ products, is the third
aspect of government initiative. The success of milk cooperatives in
transforming the social and economic landscape of Gujarat and some other parts
of the country is testimony to the role of cooperatives.
iv) Assurance of minimum support prices (MSP for agricultural products).
v) Maintenance of buffer stocks of wheat and rice by Food Corporation of India.
32. i) The population of Pakistan is very small and account for roughly about one-
tenth of China or India. China geographically occupies the largest area
among the three nations and its density is the lowest.
ii) One child norm was introduced in China in late 1970’s to check
population growth. This measure led to a decline in the sex ratio.
Due to one child norm, after few decades there will he more elderly people
in proportion to young people.
iii) The fertility rate is low in China and very high in Pakistan.
iv) Urbanisation is high in China. (4)
a) Jobless growth takes place when a country produces more goods and services
without generating employment. (2)
34. a) Protection from imports took two forms: tariffs and quotas. Tariffs are a tax on
imported goods; they make imported goods more expensive and discourage
their use. Quotas specify the quantity of goods which can be imported. Tariffs
and quotas restrict imports and protect the domestic firms from foreign
competition. (3)