CBSE Class 12 2025 Economics Question Paper with Solution Pdf available for download here. CBSE conducted the Economics exam on March 19, 2025 from 10:30 AM to 1:30 PM. The total marks for the theory paper are 80. The question paper contains 20% MCQ-based questions, 40% competency-based questions, and 40% short and long answer-type questions. Candidates can use the link below to download the CBSE Class 12 Economics Set 2 Question Paper with detailed solutions.
CBSE Class 12 Economics Question Paper 58-4-2 with Answer Key
| CBSE Class 12 2025 Economics Question Paper with Answer Key | Download PDF | Check Solution |
Under the ............ Exchange Rate System, the Central Bank can control the foreign exchange rate in a range bound manner.
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Read the following statements – Assertion (A) and Reason (R). Choose the correct alternative from the options given below:
Assertion (A): Direct taxes are imposed on income/profits of individuals/companies.
Reason (R): The burden of payment of direct taxes cannot be shifted to any other entity.
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Under the Keynesian theory, ‘Reference Line’ is a straight line passing through the origin drawn at an angle of _______.
(Choose the correct option to fill in the blank)
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Read the following statements carefully:
Statement 1: Marginal Propensity to Consume (MPC) refers to the consumption per unit of income.
Statement 2: As the income increases, the proportionate increase in the level of consumption is always more than the increase in the level of income.
In the light of the given statements, choose the correct option from the following:
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The main objective of measuring the primary deficit is to highlight present ___________.
(Choose the correct option to fill in the blank)
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Read the following statements carefully :
Statement 1: Import of heavy machinery from Japan is a source of demand for foreign exchange.
Statement 2: Financial aid by International Bank for Reconstruction and Development (IBRD) for landslide in Wayanad (Kerala) is a source of supply of foreign exchange.
In the light of the given statements, choose the correct option from the following :
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In a two-sector economy, the Aggregate Demand can be determined by adding ............ and ...............
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Read the following statements carefully :
Statement 1: The government may reduce the repo rate, to control deflationary gap prevailing in the economy.
Statement 2: The government may reduce the deflationary gap, by selling off government securities (G-Sec) in the open market.
In the light of the given statements, choose the correct option from the following :
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To arrive at the value of Gross Value Added at Factor Cost (GVA\(_{FC}\)), .......... must be ................. to/from Gross Value Added at Market Price (GVA\(_{MP}\)).
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Read the following statements carefully :
Statement 1: Public goods are those goods for which the payments are made by all the entities in the country.
Statement 2: Private goods are those goods which are provided by the government of a country at subsidised rates.
In the light of the given statements, choose the correct option from the following :
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Explain any two precautions pertaining to the Value Added Method of Estimation of National Income in a country.
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On the basis of the following hypothetical data:
Year & Nominal GDP & Nominal GDP (adjusted to base year prices)
2020 – 21 & 3,000 & 5,000
2022 – 23 & 4,000 & 6,000
Calculate the percentage change in Real Gross Domestic Product (GDP) in the year 2022 – 23 using 2020 – 21 as the base year.
"Taxation is an effective tool to reduce the inequalities of income." Justify the given statement with valid reasons.
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Read the following text carefully:
According to a report issued by a research organisation, there is a sharp decline in the overall demand in the economy, particularly in the private consumption segment. This dip in the macroeconomic variables highlights the urgent need for strategic actions to stimulate economic activities.
On the basis of the given text and common understanding, explain the measure which the government may take to solve the indicated problem.
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Elaborate any two components of the Capital Account under the Balance of Payments Account.
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Distinguish between Autonomous transactions and Accommodating transactions.
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Assuming the following for a hypothetical economy, estimate the Break-even level of Income and Equilibrium level of Income:
[(i)] Autonomous Consumption Expenditure (\(\bar{C}\)) = Rs. 50 crore
[(ii)] Marginal Propensity to Save (MPS) = 0.2
[(iii)] Autonomous Investments (\(I_0\)) = Rs. 100 crore
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Suppose there are only three firms in an imaginary economy, viz. X, Y and Z. During a year, the following transactions took place in the economy:
(I) Firm X sold goods worth Rs. 20,000 to Firm Y and Rs. 12,000 to Firm Z.
(II) Firm Y sold goods worth Rs. 11,000 to Firm X and Rs. 35,000 to Firm Z.
(III) Firm Z sold goods worth Rs. 57,000 to households for final consumption.
On the basis of the given transactions, calculate the value of Gross Domestic Product at Market Price (GDP\textsubscript{MP}) in the economy.
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Suppose there are only three firms in an imaginary economy, viz. X, Y and Z. During a year, the following transactions took place in the economy:
[(I)] Firm X sold goods worth Rs. 20,000 to Firm Y and Rs. 12,000 to Firm Z.
[(II)] Firm Y sold goods worth Rs. 11,000 to Firm X and Rs. 35,000 to Firm Z.
[(III)] Firm Z sold goods worth Rs. 57,000 to households for final consumption.
On the basis of the given transactions, calculate the value of Gross Domestic Product at Market Price (GDP\textsubscript{MP}) in the economy.
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Discuss the likely impact of construction of 20 new hospitals in a country on the Gross Domestic Product (GDP) and Welfare in the economy.
On the basis of the following data, estimate the value of Net Domestic Product \(NDP_FC\):
S.No. & Items & Amount (in Rs. Crore)
(i) Household Consumption Expenditure & 800
(ii) Gross Business Fixed Capital Formation & 150
(iii) Gross Residential Construction Investment & 120
(iv) Government Final Consumption Expenditure & 270
(v) Excess of Imports over Exports & 20
(vi) Inventory Investments & 50
(vii) Gross Public Investments & 130
(viii) & Net Indirect Taxes & 20
(ix) Net Factor Income from Abroad & (–) 25
(x) Consumption of Fixed Capital & 40
``Disposition phase of circular flow of income involves flow of factor income from firms to households.''
Justify the statement giving valid reason.
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Elaborate the process of Credit Creation using a suitable numerical example.
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Read the following text carefully:
`This function of money provides different items to be evaluated against a common standard. It allows comparison of prices and keeping financial records.''
(i) On the basis of the given text, identify the indicated function of money.
(ii) List any other two functions of money.
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Identify, which of the following does not indicate the similarities in the policies of India and Pakistan in the post 1947 period. Choose the correct option.
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Identify, which of the following statements is incorrect about the Rural Banking system in India. (Choose the correct option)
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In the post-independence era, the policy makers of India pushed for ‘self-reliance’ for the first _______ Five Year Plans. (Choose the correct option to fill in the blank)
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Production of diverse varieties of crops rather than one specialized crop is known as diversification of __________. (Choose the correct option to fill in the blank)
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Identify, which of the following statements is incorrect about the functions of environment. (Choose the correct option)
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Read the following statements carefully:
Statement 1: The Food Corporation of India maintains buffer stocks of wheat and rice as a measure to improve market mechanism.
Statement 2: Minimum Support Price (MSP) is imposed by the government to safeguard the interest of farmers.
In the light of the given statements, choose the correct option from the following:
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Both statements are correct. The Food Corporation of India maintains buffer stocks of essential grains to stabilize prices and ensure food security. MSP is a price set by the government to protect farmers against any sharp fall in market prices. Quick Tip: Buffer stocks and MSP both aim to protect farmers’ interests and stabilize food grain markets.
Suppose an economy is experiencing a situation of rise in Real Gross Domestic Product (GDP), without any corresponding rise in employment opportunities. In economic parlance, such a situation is termed as _________ growth. (Choose the correct option to fill in the blank)
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Read the following statements – Assertion (A) and Reason (R). Choose the correct alternative from the options given below:
Assertion (A): Excessive regulation of permit license raj prevented certain private firms from becoming more efficient.
Reason (R): Private sector wasted a significant time in obtaining licenses rather than enhancing product quality and international competitiveness.
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Read the following statements carefully:
\textit{Statement 1: The British policies were accountable for commercialisation of Indian agriculture.
\textit{Statement 2: In the larger interest of Indians, the British rulers focused on the infrastructural growth of India.
In the light of the given statements, choose the correct option from the following:
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Statement 1 is true as the British policies promoted the commercialisation of Indian agriculture to benefit British industries. Statement 2 is false because the infrastructural development under British rule primarily served their colonial interests rather than the welfare of Indians. Quick Tip: Colonial infrastructure projects in India largely supported British trade, not Indian public welfare.
Read the following statements – Assertion (A) and Reason (R). Choose the correct alternative from the options given below:
Assertion (A): Information plays a crucial role in judicious decision-making about investing in human capital.
Reason (R): Individuals invest to acquire information about the labour market and other areas such as education and healthcare.
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Elaborate the reasons responsible for emergence of poverty in Pakistan.
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“Under the British rule, India underwent systematic economic exploitation with its resources and wealth being diverted to Britain.” Justify the given statement with valid explanation.
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Appraise the Navratna policy adopted by the Government of India in the reforms of 1991.
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Distinguish between human capital and physical capital.
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Critically appraise the micro-credit programmes in rural India.
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State the meaning of sustainable development.
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Explain the consequences of the implementation of the One Child Policy in China.
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The One Child Policy, introduced by China to control its rapidly growing population, led to several consequences:
1. Ageing Population:
One of the major consequences was the rapid ageing of the population. With fewer children being born, the proportion of elderly people in the population increased, leading to a higher dependency ratio and a strain on social services, particularly in healthcare and pension systems.
2. Gender Imbalance:
Due to a strong cultural preference for male children, the One Child Policy exacerbated gender imbalances. Many families opted for sex-selective abortions or abandoned female children, leading to a significant shortage of women in the population, which in turn caused social issues like a higher number of unmarried men.
3. Social Challenges for Single Children:
The policy also created a generation of "only children", who faced increased pressure from their parents and society to succeed. These children were often expected to care for their ageing parents, as there were no siblings to share the responsibility. This led to mental health and emotional challenges for many individuals.
4. Economic Impact:
The reduction in the workforce due to fewer births led to labour shortages in various sectors, affecting China’s economic growth. As the working-age population shrank, the country had to rely more on automation and migrant workers to fill the gap.
5. Unbalanced Population Growth:
The policy also resulted in an uneven population distribution, with urban areas seeing more growth compared to rural areas, contributing to regional imbalances and further straining the economy.
In summary, while the One Child Policy helped curb China’s population growth, it created long-term social, demographic, and economic challenges that the country continues to address.
Quick Tip: The One Child Policy in China achieved its goal of controlling population growth, but it also led to social, economic, and demographic challenges, such as ageing, gender imbalance, and workforce shortages.
State any one reason for the implementation of the One Child Policy in China.
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One primary reason for the implementation of the One Child Policy in China was to control the rapidly increasing population. In the 1970s, China's population was growing at an unsustainable rate, which put immense pressure on the country's resources, such as food, water, and energy. The government introduced this policy to alleviate the strain on resources, ensure economic stability, and improve living standards for its citizens.
Quick Tip: The One Child Policy was primarily implemented to manage China's rapid population growth and reduce the strain on resources and infrastructure.
Organic farming offers a means to substitute costlier agricultural inputs with locally produced organic inputs.
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Informalisation of workforce in India has increased various concerns on the front of employment generation among the youth of the country.
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State any one significance of rising youth and female participation in the Indian workforce.
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The rising youth and female participation in the workforce is significant because it helps tap into the demographic dividend. The increasing participation of these groups means that a larger section of the population is contributing to economic activities, which enhances the overall productivity of the country. The youth bring energy, innovation, and technological familiarity, while the inclusion of women in the workforce contributes to greater gender equality and economic independence for women. This leads to increased household incomes and improved standards of living. Moreover, it enhances the diversity and skill set within industries, leading to more balanced and inclusive economic growth.
Quick Tip: Increased youth and female participation helps tap the demographic dividend, leading to a more inclusive and productive economy.
Identify any two sectors which may be highlighted as promising for generating quality employment in India.
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Two sectors that can be highlighted as promising for generating quality employment in India are:
1. Agro-Processing Industry:
The agro-processing sector holds immense potential for generating quality jobs in India. By adding value to raw agricultural products through processing, packaging, and branding, the sector can create employment opportunities across rural areas, benefiting farmers and workers involved in the processing units. Moreover, agro-processing promotes sustainable agricultural practices and improves the supply chain infrastructure.
2. Care Economy:
The care economy, which includes healthcare, elder care, child care, and services related to well-being, is a rapidly growing sector. With India's ageing population and increasing demand for healthcare services, this sector has vast potential for generating jobs, especially for women. Additionally, the sector can offer diverse roles across various levels, from healthcare professionals to caregivers, and provide stable, quality employment.
Both of these sectors can significantly contribute to quality job creation while supporting the broader goals of social and economic development.
Quick Tip: Agro-processing and care economy are promising sectors for generating quality employment by tapping into rural potential and meeting the demands of an ageing population.
Elaborate the meaning of disguised unemployment with the help of a suitable example.
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“Indian economy has greatly benefitted by the process of globalisation.”
Justify the given statement with valid arguments.
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Distinguish between Multilateral Trade and Bilateral Trade.
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Discuss briefly the foreign exchange reforms undertaken by the Government of India in the post 1991 period.
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Distinguish between Tariffs and Quotas.
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