HIGHER SECONDARY MODEL EXAMINATION 2011 Part III ECONOMICS Time: 2.45hrs Maximum score:80 1.

. Pick out the odd one and justify(3) i. Aggregate demand, Price of sugar, GDP, Balance of Payment ii. Bank rate, open market operation, taxation, CRR iii. Change in inventory, NI, wealth, capital formation 2. Write the appropriate terms (3) i. Value of next best alternative forgone. ii. The upper limit of the price fixed for a commodity by the Govt. iii. The total liability of the monetary authority of the country. 3. Observe the figure and answer the following(3) i. If the consumers income is Rs.40, write the price of good X and good Y. ii. Write the budget line equation of the bundle. iii. Write the slope of the budget line. 5

Good Y

Good X

10

4. Fill the missing cells. (2) A B C (A+B) NFIA GDP NNPFC NNPMP NNPMP Depreciation NFIA NNP 5. The demand for a good increases from 40 to 60 due to a fall in the price from Rs.10 to Rs.5. Calculate price elasticity of demand (2) 6. Read the table and find out the relationship between the variables.(2) Variables Relationship Price and Demand Income and Demand Price of Complementary good and Demand Price of Giffen good and Demand 7. Explain how the following factors affect the supply of rice?(3) Price of chemical fertilizers increases. Govt. raises subsidy on agriculture. Wage rate increases.

8. GDP can be measured by using value added method, income method and expenditure method. Prepare the equations to find out GDP with these separate methods. (6) 9. Calculate personal income and personal disposable income from the following data.( in crore ) (3) NI-15000, Undistributed profit-1000 , Transfer income-200 , Corporation tax-400, personal tax- 300, Interest paid by household 800, interest received by household-700 10. Complete the table and draw AVC, AFC and SAC curves.(6) Output TC TFC 0 40 1 2 3 4 5 TVC AVC AFC SAC SMC 50 80 90 95 105 125

11. GDP of a country can be taken as an index of the welfare of the people. Do you agree? Why?(4) 12. Fill in the blanks (4) M1 =+. M2 =+. M3 =+. M4 =+. 13. Correct the false statement (4) i. The problem of how to produce concerned with the distribution of goods. ii. Perfectly elastic demand curve is a vertical line parallel to Y axis. iii. For a price taking firm MR is equal to market price. iv. 1 + mpc = mps 14. From the figure find out the AR of a competitive firm.(2) Revenue TR

Output 15. A firm stops production in the short run if the price goes below AVC. Why? (2) 16. A consumers optimum bundle lies on the highest indifference curve which is tangent to the budget line. Show it in a diagram.(3) 17. Calculate equilibrium level of income in an economy by using the following data. (3) C = 20 + 0.75Y, I = 20, G = 40, TR = 80, T= 30 18. RBIs Credit Policy targets inflation. (The Economic Times 30/01/2011). Discuss the role of RBI in controlling inflation.(6)

19. As per the budget estimate of 2010-11 the fiscal deficit in India is 5.5% of GDP. Discuss various methods of reducing fiscal deficit in India.(3) 20. The Balance of Payment is said to be in surplus if autonomous receipts are greater than autonomous payments. Distinguish between autonomous and accommodating items in the BoP.(3) 21. Graphically examine the effect of price floor and price ceiling on equilibrium price and quantity.(5) 22. Suppose Central Govt. has sanctioned Rs.10 crore to Govt. of Kerala for making additional investments. Assume that the mpc of the state is 0.75. Find multiplier and multiplier effect on income. (3) 23. Complete the flow chart. (2) Government budget

Capital budget Revenue Expenditure 24. Classify the following items of trade into visible and invisible heads.(3) Machinery, insurance, textiles, shipping service, software, computer.