Please see below Class 12 Economics Sample Paper Term 1 Set B with solutions. We have provided Class 12 Economics Sample Papers with solutions designed by Economics teachers for Class 12 based on the latest examination pattern issued by CBSE. We have provided the following sample paper for Term 2 Class 12 Economics with answers. You will be able to understand the type of questions which can come in the upcoming exams.

CBSE Sample Paper for Class 12 Economics Term 1 Set B

Section A

1. ……… is a type of deficit of government budget which includes interest payments on previous loans.
(a) Fiscal deficit
(b) Revenue deficit
(c) Primary deficit
(d) All of these

2. ‘A’ has a good that ‘B’wants and ‘B’ has a good that ‘A’wants. This is referred to as ……… under barter system of exchange.
(a) lack of double coincidence of wants
(b) lack of unit of account
(c) lack of store of value
(d) None of these

3. Private enterprises will always desire to allocate resources to those areas of production where profits are high. However, it is possible that such areas of production (like production of alcohol) may not promote social welfare. In such situation, what government should do to discourage its consumption?
(a) Impose heavy taxes
(b) Make people aware of the disadvantages of consumption of such goods
(c) Discourage production
(d) All of the above

4. Human capital is a ……… concept.
(a) stock
(b) flow
(c) Both (a) and (b)
(d) None of these

5. 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) (i) (ii) (iii) (iv) (b) (iii) (ii) (i) (iv)
(c) (ii) (iv) (i) (iii) (d) (iv) (i) (iii) (ii)

6. Cheques are an example of ……… .
(a) legal money
(b) bank money
(c) fiat money
(d) None of these

7. Since 2014, the banking sector has witnessed the adoption of the JAM (Jan-Dhan, Aadhaar and Mobile) trinity and issuance of licences to payments banks and Small Finance Banks (SFBs) to achieve last-mile connectivity as a part of 
(a) banking revolution
(b) financial inclusion
(c) promotion of trade
(d) None of these

8. Read the following statements carefully and choose the correct alternative from the following.
Statement I Money is used as standard for deferred payments.
Statement II In credit money, the money value is less than the commodity value.
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

9. Under the industrial sector reforms, government abolished the licensing requirement of all industries, except for three industries. Which of the following reasons can be accounts for the same?
(a) These industries were of strategic importance
(b) Government wants to maintain the power in its hand
(c) Private sector was not capable enough
(d) All of the above

10. Read the following statements carefully and choose the correct alternative from the following.
Statement I Gross demand deposits include inter-bank claims whereas net demand deposits do not include inter-bank claims.
Statement II The central bank is the sole supplier of money in an economy.
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 incorrec

11. ……… refers to the shift from farming pattern from subsistence farming to commercial farming.
(a) Revolution
(b) Marketing
(c) Diversification
(d) None of these

12. High powered money is equal to
(a) money supplied by the RBI only
(b) total supply of money in the economy
(c) notes and coins held by the people
(d) money (notes and coins) held by the public, vault cash of the commercial banks as well as cash reserves of the commercial banks with the RBI

13. ……… refers to stock maintained by the government through purchase from the farmers in the years of surplus crop production.
(a) Public distribution
(b) Minimum support price
(c) Buffer stock
(d) None of these

14. Read the following statements carefully and choose the correct alternative from the following.
Statement I Public enterprise always discourage production of goods which is profitable.
Statement II GDP growth is not an objective of economic growth.
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

15. ……… is known as the architect of Indian planning in India.
(a) Dadabhai Naoroji
(b) VKRV Rao
(c) P.C. Mahalanobis
(d) None of these

16. …………..industries were built up to set up infrastructural base of the country.
(a) Small scale
(b) Medium scale
(c) Large scale
(d) All of these

17. Read the following statements carefully and choose the correct alternative from the following.
Statement I The government of India has constituted NITI Aayog to replace the Planning Commission. The full form of NITI is National Institution of Technology in India.
Statement II ‘Economic growth’ and ‘Economic development’means one and the same.
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

18. …………..gives more bargaining power to small and marginal farmers.
(a) Land ceiling
(b) Commercialisation
(c) Cooperative farming
(d) None of these

19. Expenditure on preventive medicine means expenditure on
(a) vaccination
(b) lifesaving drugs
(c) spread of health literacy
(d) All of these

20. Government budget deficit can be financed by ……… .
(a) borrowing from RBI
(b) borrowing from the public
(c) Both (a) and (b)
(d) Neither (a) nor (b)

21. Read the following statements carefully and choose the correct alternative from the following.
Statement I Flexible exchange rate is determined by the supply and demand of foreign exchange in the international market.
Statement II Currency appreciation depicts a situation when domestic currency gains its value in relation to a foreign corrency.
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

22. ……… helps in the promotion of regional equality.
(a) Small scale industries
(b) Medium scale industries
(c) Large scale industries
(d) All of these

23. Post-independence, the exchange rate was determined under
(a) fixed exchange rate system
(b) flexible exchange rate system
(c) manage floating system
(d) None of these

24. ……… items of BoP are only recorded in capital account of BoP.
(a) Above the line items
(b) Below the line items
(c) Both (a) and (b)
(d) None of these

Section B

25. Financial help received from an MNC to fight against the pandemic by the Indian government is a type of ……… .
(a) capital receipt
(b) revenue receipt
(c) Both (a) and (b)
(d) None of these

26. Assertion (A) During 2014-15, the GVA growth rate of agriculture and its allied sectors was less than 19%.
Reason (R) Decrease in public investment since 1991 was the main reason for this trend.
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 true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

27. ……… is an alternative method of estimation of poverty in India.
(a) Gini coefficient
(b) Jail cost of living index
(c) HDI
(d) Sen index

28. Read the following statements carefully and choose the correct alternative from the following.
Statement I Rural development is a process which attempts to improve the standard of living of rural people.
Statement II Commercial banks were inducted into the field of agricultural credit under the Banking Reforms Act, 1975.
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

29. Assertion (A) With the introduction of railways, it became easy for the colonial government to administer different parts of the country and raw materials from India via sea route.
Reason (R) Development of railways in India had led to reduction in the cost of transportation for both passenger and goods traffic. Eventually, it become the cheapest mode of transportation.
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 true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

30. Public distribution system is comprised of ……… .
(a) fair price shops
(b) buffer stock
(c) open market
(d) Both (a) and (b)

31. Write the incorrect pair

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

32. Assertion (A) The green revolution led to the rise in the production of foodgrains.
Reason (R) It led to mechanisation and increase in public investment in infrastructure.
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 true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

33. Assertion (A) Money as medium of exchange, has overcome the problem of lack of double coincidence under the C-C economy.
Reason (R) Currency has a general acceptance which makes it convenient to use and has segregated buying and selling activities.
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 true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

34. Primary deficit in a government budget will be zero, when ……… .
(a) revenue deficit is zero
(b) net interest payments are zero
(c) fiscal deficit is zero
(d) fiscal deficit is equal to interest payment

35. Read the following statements carefully and choose the correct alternative from the following.
Statement I Sale of a portion of equity share holdings to private sector is disinvestment.
Statement II Privatisation leads to transfer of ownership.
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

36. Write the correct pair.

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

37. Which of the following is not true for Small Scale Industries (SSIs)?
(a) SSI is labour intensive and therefore, employment oriented.
(b) SSI needs small investment and is therefore, equity oriented.
(c) SSI is capital intensive and therefore, increases productivity.
(d) SSI shows locational flexibility and is therefore, equality oriented.

38. Assertion (A) Lack of training in farming activity leads to low productivity and growth of agriculture in India.
Reason (R) Reforms in India focused upon development of industries which was failed to generate enough employment.
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 true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

39. In the colonial period, which of the following infrastructure was poor?
(a) Social infrastructure
(b) Economic infrastructure
(c) Both (a) and (b)
(d) Neither (a) nor (b)

40. Assertion (A) An educated person is able to generate more income than an uneducated person.
Reason (R) The labour skill of an educated person is more than that of an uneducated person.
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 true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

41. Assertion (A) A country always tries to balance the BoP, i.e., balance in current account equals to balance in capital account.
Reason (R) Balanced BoP indicates stable economic relation with rest of the world.
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 true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

42. Observe the graph given below

As per data given, price of euro is falling against Indian rupee, this indicates which of the following?
(a) Appreciation of INR
(b) Depreciation of Euro
(c) Appreciation of Euro
(d) Both (a) and (b)

43. Choose the incorrect option from the given below.
(a) Public enterprises are owned by both public and private sector
(b) TISCO was set up by Darobji Tata
(c) Green revolution helped India to attain food sufficiency
(d) Buffer stock in India is maintained by FCI

44. Assertion (A) With decrease in SLR, credit creation capacity of commercial banks reduces.
Reason (R) When there is a decrease in reserve ratios, banks have less funds available for loans.
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 true, but Reason (R) is false
(d) Both are false

45. Read the following statements carefully and choose the correct alternative from the following.
Statement I High degree of consumer’s sovereignty leads to greater consumer choice.
Statement II Liberalisation and laissez faire policy are one or the same thing.
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

46. Assertion (A) All the objectives of budget are inter-related to each other and lead to social welfare.
Reason (R) Government makes provisions of public goods when their demand can’t be met alone by private sector.
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 true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

47. Use of chemical fertilizers is related to which of the following reforms in agriculture?
(a) Institutional
(b) Technical
(c) General
(d) None of these

48. India was under a deep crisis before 1990s due to low economic growth and balance of payment deficits. India was a highly indebted country too. In spite of this, India approached for further a loan of $7 billion from which of the following international agencies?
(a) WTO
(b) GATT
(c) IMF
(d) IBRD

Section C

Direction : – Read the following case study answer questions 49 to 54 on the basis of the same.
Foreign trade influences Indian aggregate demand in two ways. First, when Indians buy foreign goods, this spending i.e., imports escape as a leakage from the circular flow of income decreasing aggregate demand. Second, our exports to foreigners enter as an injection into the circular flow, increasing aggregate demand for goods produced within the domestic economy.
Balance of payments record the transactions in goods, services and financial assets between residents of a country with the rest of the world. In the financial account, net foreign direct investment at USD 12 billion was higher than USD 6.4 billion in Jan-Mar quarter 2019.
On the portfolio investment side, there was a net outflow of USD 13.7 billion as compared to USD 9.4 billion inflow in the same quarter last year on account of money being pulled out from both debt and equity markets. A surplus at both current and capital account has resulted in a forex reserve accretion of USD 18.8 billion in the Jan-Mar quarter 2020.

49. Read the following statements carefully and choose the correct alternative from the following.
Statement I Imports are considered as leakages and thus not recorded in BoP account.
Statement II Increase in foreign exchange boosts aggregate demand in the economy.
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

50. Assertion (A) A surplus in both current and capital accounts of BoP leads to accumulation of foreign exchange reserve.
Reason (R) Increase in foreign exchange reserve promotes economic growth in 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 true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

51. Portfolio investments are part of ……… account of BoP.
(a) current
(b) capital
(c) Both (a) and (b)
(d) Neither (a) nor (b)

52. On the portfolio investment side, there was a net outflow of USD 13.7 billion as compared to USD 9.4 billion inflow in the same quarter last year on account of money being pulled out from both debt and equity markets. Net outflow is ……… item.
(a) debit side
(b) credit side
(c) Either (a) or (b)
(d) Neither (a) nor (b)

53. Income from financial assets is recorded in which account of BoP?
(a) Current account
(b) Capital account
(c) Both (a) and (b)
(d) Neither (a) nor (b)

54. Foreign trade leads to ……… in aggregate demand in the economy.
(a) increase
(b) Decrease
(c) Either (a) or
(b) (d) None of these

Direction : –  Read the following case study and answer questions 55 to 60 on the basis of the same.
On-the-job training, also known as OJT, is a hands-on method of teaching the skills, knowledge and competencies needed for employees to perform a specific job within the workplace.
Employees learn in an environment where they will need to practice the knowledge and skills obtained during their training. The Indian software industry has been showing an impressive record over the past decade. Entrepreneurs, bureaucrats and politicians are now advancing views about how India can transform itself into a knowledge-based economy by using Information Technology (IT). There have been some instances of villagers using e-mail which are cited as examples of such transformation. Likewise, e-governance is being projected as the way of the future. The value of IT depends greatly on the existing level of economic development.

55. Which of the following components of human capital formation are mentioned in above paragraph?
(a) On-job-training
(b) Information technology
(c) Government policies
(d) Both (a) and (b)

56. Assertion (A) Training is must for human development along with education and health.
Reason (R) Training increases the productivity and keeps the human capital pro active.
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 true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true

57. Read the following statements carefully and choose the correct alternative from the following.
Statement I On-job-training is a hands on method of teaching the skills and knowledge.
Statement II Agricultural yield can be increased through training farmers about modern farming methods.
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

58. Which of the following is/are the advantage(s) of information and technology in human development?
(a) It helps to make informed choice
(b) It enhances productivity
(c) It helps in e-governance
(d) All of these

59. In which of the following ways, IT can help in transformation of rural areas?
(a) e-governance
(b) e-mails
(c) Both (a) and (b)
(d) None of these

60. Who among the following advocates to transform India into a knowledge hub?
(a) Bureaucrat
(b) Politicians
(c) Entrepreneurs
(d) All of these