Ahsec Class 12 Economics Solved Question Paper - 2026| ASSEB BOARD
2026
ECONOMICS
Full Marks: 80
(Part-A=40 +
Part-B=40)
Pass Marks: 24
Time: Three hours
The figures in the
margin indicate full marks for the questions
PART – A
(Introductory
Macroeconomics)
1. Answer any four of the following as directed: 1x4= 4
(a) Define
'economic agents!
Ans:-
Economic agents are individuals or entities (such as consumers, producers, the
government, and the central bank) that make economic decisions and choices
regarding consumption, production, and distribution.
(b) Name the
four major sectors of an economy.
Ans:- The
four main sectors of the economy are:-
(i) Household
sector
(ii) Producer
(or firm) sector
(iii)
Government sector
(iv) Foreign
(or external) sector
(c)
"Flows are defined over a period of time." (State True or False)
Ans:- True.
(d) Define
full employment level of income.
Ans:- The
full employment level of income is the level of national income at which all
individuals willing and able to work at the prevailing wage rate are employed,
and there is no involuntary unemployment.
(e) NDPMP
= GDPMP – Depreciation. (Fill
in the blank)
(f) How do
economists define a non-rivalrous good?
Ans:- A
non-rivalrous good is a good whose consumption by one individual does not
reduce or limit its availability to another individual.
(g) At what
point is the 'balance of trade' said to be balanced?
Ans:- The
balance of trade is said to be balanced when the total value of a country's
exports of visible goods is exactly equal to the total value of its imports of
visible goods.
2. Answer any five of the following questions: 2x5= 10
(a)
Distinguish between Intermediate goods and Final goods.
(b) Explain
the concept of net investment.
Ans:- Net
investment refers to the actual increase in an economy's existing capital stock
over a specific period. It is calculated by subtracting depreciation
(consumption of fixed capital) from gross investment.
Net Investment = Gross Investment – Depreciation
(c)
Distinguish between Gross National Product (GNP) and Net National Product
(NNP).
(d) What are
the components of aggregate demand?
Ans:- In a
four-sector economy, the components of Aggregate Demand (AD) are as follows:-
(i) Private
Consumption Expenditure (C): Total expenditure incurred by households on
goods and services.
(ii)
Investment Expenditure (I): Expenditure incurred by private enterprises and
the government on capital goods.
(iii)
Government Expenditure (G): Total expenditure incurred by the government on
public consumption and investment.
(iv) Net
Exports (X - M): The difference between exports (X) and imports (M).
AD = C + I + G + (X - M)
(e) Mention
any two motives of holding money.
Ans:-
According to Keynes's liquidity preference theory, there are two main motives
for holding money:-
(i)
Transaction Motive: Holding money to meet the day-to-day transactions of
individuals and business firms (such as buying groceries, paying wages, etc.).
(ii)
Precautionary Motive: Holding money for unforeseen circumstances,
emergencies, or sudden needs (such as a sudden illness or accident).
(f) Under
what circumstances does a fiscal deficit emerge? Support your answer with an
example.
Ans:-Concept:
A fiscal deficit occurs when the government's total expenditure exceeds its
total receipts (excluding borrowings) during a financial year. It indicates
that the government's revenue is insufficient to cover its expenditure,
necessitating borrowing.
Example:
If the government's total budgetary expenditure is ₹1,20,000 crore, but its
total revenue (revenue receipts + non-debt capital receipts) is only ₹90,000
crore, then the fiscal deficit would be:-
Fiscal Deficit = Total Expenditure - Total Receipts
(excluding borrowings)
Fiscal Deficit = 1,20,000 - 90,000 = ₹30,000 crore
(g) If the
marginal propensity to consume (MPC) is 0.8, then calculate the government
expenditure multiplier.
3. Answer any two of the following questions: 3x2= 6
(a) Mention
and describe very briefly the three methods of measuring national income.
Ans:- There
are three standard methods for measuring national income:-
(i)
Value-added method (Product method): This method measures national income
by calculating the net value added at factor cost by all productive enterprises
within the domestic territory of the country during an accounting year. It
focuses on the primary, secondary, and tertiary sectors.
(ii) Income
method: This method measures national income by aggregating all factor
incomes generated through the provision of factor services (land, labor,
capital, and entrepreneurship) by the normal residents of the country. It
includes wages, rent, interest, and profit.
(iii)
Expenditure method: This method measures national income by summing up all
final expenditures incurred on goods and services produced in the economy
during an accounting year. Its components include private consumption,
investment, government expenditure, and net exports.
(b) How do
commercial banks create credit?
Ans:-
Commercial banks create credit (or money supply) through the process of
accepting deposits and granting loans. They rely on the historical experience
that not all depositors withdraw their money at the same time.
(i) Primary
deposits: When customers deposit cash in commercial banks, these become
initial or primary deposits.
(ii)
Maintenance of reserves: Keeping statutory legal requirements (such as the
Cash Reserve Ratio and Statutory Liquidity Ratio) in mind, banks retain a
portion of these deposits as cash reserves to meet daily withdrawal demands and
lend out the remaining portion.
(iii)
Derivative deposits (Credit creation): Banks do not grant loans in cash
directly; instead, they open a bank account in the borrower's name. This
creates a derivative deposit. When the borrower uses this money to make a
payment, it re-enters the banking system as a new deposit. Through this continuous
chain of lending and re-depositing, commercial banks create a total volume of
loans that is a multiple of their original cash reserves, determined by the
money multiplier (1 / legal reserve ratio).
(c) Define
Marginal Propensity to Consume (MPC). How is it related to Marginal Propensity
to Save (MPS)? 1+2=3
(d) Mention
any three features of the FRBM Act, 2003.
Ans:- The
'Fiscal Responsibility and Budget Management (FRBM) Act, 2003' was enacted in
India to instill fiscal discipline, reduce the fiscal deficit, and maintain
macroeconomic stability.
Its three
key features are as follows:-
(i)
Reduction of fiscal deficit: It mandated the central government to reduce
its fiscal deficit to 3% of the Gross Domestic Product (GDP). (Note: Subsequent
amendments set targets for specific timeframes).
(ii)
Elimination of revenue deficit: Its objective was to completely eliminate
the revenue deficit within a specified timeframe, ensuring that borrowed funds
were utilized solely for capital formation (asset creation) rather than for
meeting day-to-day revenue expenditures.
(iii)
Restriction on borrowing from the RBI: It prohibited the Reserve Bank of
India (RBI) from purchasing primary issues of central government securities
after 2006, thereby preventing the central bank from directly monetizing the
government deficit (i.e., printing money to finance the deficit).
4. Answer any two of the following questions: 6x2= 12
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