Class 12 Economics: CBSE Marking Scheme (2024-25) | Economics Class 12 - Commerce PDF Download

 Page 1


1 
 
ECONOMICS (030)     
CLASS XII (2024-25) 
MARKING SCHEME         
 
 Q.NO.    SECTION A – MACRO ECONOMICS   MARKS 
1. D. Assertion (A) is false, but Reason (R) is true. 1 
2. C. Redistribution of income 1 
3. B. Net Product Taxes 1 
4. B. flexible 1 
5. A. (i) 
For Visually Impaired Candidates: 
B. 45
0
 
1 
 
1 
6. B. fiscal 1 
7. A. Statement 1 is true and Statement 2 is false. 1 
8. D. Autonomous Consumption, Induced Consumption and Autonomous 
Investment 
1 
9. C. Both Statements 1 and 2 are true.  1 
10. C. deficit, 0.74 
For Visually Impaired Candidates: 
C. Receipts < Payments on current account  
1 
 
1 
11. 
(A) 
 
 
11. 
(B) 
Domestic Income (NDPFC)  = i + iv + ii + iii + vii + vi – v – x – viii 
                                            = 800+170+150+120+500+140–20 – 40 – 70 
                                            = ? 1,750 crore 
OR 
Steps pertaining to the estimation of National Income under the Income 
method:  
 1.    Identify and classify production units into distinct heads namely primary, 
secondary, and tertiary sector. 
 2. Estimate and classify the factor payments in different categories as 
Compensation of Employees, Operating Surplus, and Mixed Income. The 
sum of factor payments represents the contribution of the sectors to 
Domestic Income (NDPFC). 
 3.   Finally, estimate and add the value of Net Factor Income from Abroad 
(NFIA) to arrive at National Income (NNPFC). 
1 ½  
1  
½ 
 
 
 
1 
 
1 
 
 
 
1 
 
12. Tax revenue collection by the government may be categorized as: 
• Direct Taxes: It refers to those taxes whose impact and incidence 
lie on the same entity. In other words, the liability of paying direct 
taxes can’t be shifted. 
 
½ + 1  
 
 
½ + 1 
  
Page 2


1 
 
ECONOMICS (030)     
CLASS XII (2024-25) 
MARKING SCHEME         
 
 Q.NO.    SECTION A – MACRO ECONOMICS   MARKS 
1. D. Assertion (A) is false, but Reason (R) is true. 1 
2. C. Redistribution of income 1 
3. B. Net Product Taxes 1 
4. B. flexible 1 
5. A. (i) 
For Visually Impaired Candidates: 
B. 45
0
 
1 
 
1 
6. B. fiscal 1 
7. A. Statement 1 is true and Statement 2 is false. 1 
8. D. Autonomous Consumption, Induced Consumption and Autonomous 
Investment 
1 
9. C. Both Statements 1 and 2 are true.  1 
10. C. deficit, 0.74 
For Visually Impaired Candidates: 
C. Receipts < Payments on current account  
1 
 
1 
11. 
(A) 
 
 
11. 
(B) 
Domestic Income (NDPFC)  = i + iv + ii + iii + vii + vi – v – x – viii 
                                            = 800+170+150+120+500+140–20 – 40 – 70 
                                            = ? 1,750 crore 
OR 
Steps pertaining to the estimation of National Income under the Income 
method:  
 1.    Identify and classify production units into distinct heads namely primary, 
secondary, and tertiary sector. 
 2. Estimate and classify the factor payments in different categories as 
Compensation of Employees, Operating Surplus, and Mixed Income. The 
sum of factor payments represents the contribution of the sectors to 
Domestic Income (NDPFC). 
 3.   Finally, estimate and add the value of Net Factor Income from Abroad 
(NFIA) to arrive at National Income (NNPFC). 
1 ½  
1  
½ 
 
 
 
1 
 
1 
 
 
 
1 
 
12. Tax revenue collection by the government may be categorized as: 
• Direct Taxes: It refers to those taxes whose impact and incidence 
lie on the same entity. In other words, the liability of paying direct 
taxes can’t be shifted. 
 
½ + 1  
 
 
½ + 1 
  
2 
 
• Indirect Taxes: It refers to those taxes whose impact and incidence 
may lie on different entities. In other words, the liability of paying 
indirect taxes can be shifted. 
13. (I) Foreign Portfolio Investments in India in the fiscal year 2023-24 will be     
recorded on the credit side of the capital account of the Balance of 
Payments (BOP) account.  
It is recorded on the credit side, as it results in the inflow of foreign 
exchange. Furthermore, such transactions are documented in the capital 
account as they reflect the change in the ownership of financial assets 
between the residents of a country and rest of the world. 
(II) Balance of Payments deficit occurs when autonomous receipts fall short 
of autonomous payments during a given fiscal year in an economy.  
 
 
3 
 
 
 
 
1 
 
14. 
(A) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Given consumption curve (C) intersecting 45
o
 line at B (Break-even level of 
income). Steps for derivation of saving curve from the consumption curve 
are as follows:  
1. Take OA on the negative intercept on Y-axis equals to OC (Autonomous 
consumption) having positive intercept on Y-axis, as a starting point of the 
saving curve.  
2. Draw a perpendicular from point B (where, Y=C) intersecting the X-axis 
at B’ (where S=0)
 
which is another point on the saving curve.  
3. Join point A to point B’ extending the line till point S to get the saving 
curve (AS). 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For Visually Impaired Candidates: 
Given consumption curve (C) intersecting 45
o
 line at B (Break-even level of 
income). Steps for derivation of saving curve from the consumption curve 
are as follows:  
1. Take OA on the negative intercept on Y-axis equals to OC (Autonomous 
consumption) having positive intercept on Y-axis, as a starting point of the 
saving curve.  
2. Draw a perpendicular from point B (where, Y=C) intersecting the X-axis 
at B’ (where S=0)
 
which is another point on the saving curve.  
3. Join point A to point B’ extending the line till point S to get the saving 
curve (AS). 
 
OR 
 
 
 
1 
 
 
1 
 
1 
 
 
 
 
 
 
1 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 
 
 
 
 
 
 
 
 
Page 3


1 
 
ECONOMICS (030)     
CLASS XII (2024-25) 
MARKING SCHEME         
 
 Q.NO.    SECTION A – MACRO ECONOMICS   MARKS 
1. D. Assertion (A) is false, but Reason (R) is true. 1 
2. C. Redistribution of income 1 
3. B. Net Product Taxes 1 
4. B. flexible 1 
5. A. (i) 
For Visually Impaired Candidates: 
B. 45
0
 
1 
 
1 
6. B. fiscal 1 
7. A. Statement 1 is true and Statement 2 is false. 1 
8. D. Autonomous Consumption, Induced Consumption and Autonomous 
Investment 
1 
9. C. Both Statements 1 and 2 are true.  1 
10. C. deficit, 0.74 
For Visually Impaired Candidates: 
C. Receipts < Payments on current account  
1 
 
1 
11. 
(A) 
 
 
11. 
(B) 
Domestic Income (NDPFC)  = i + iv + ii + iii + vii + vi – v – x – viii 
                                            = 800+170+150+120+500+140–20 – 40 – 70 
                                            = ? 1,750 crore 
OR 
Steps pertaining to the estimation of National Income under the Income 
method:  
 1.    Identify and classify production units into distinct heads namely primary, 
secondary, and tertiary sector. 
 2. Estimate and classify the factor payments in different categories as 
Compensation of Employees, Operating Surplus, and Mixed Income. The 
sum of factor payments represents the contribution of the sectors to 
Domestic Income (NDPFC). 
 3.   Finally, estimate and add the value of Net Factor Income from Abroad 
(NFIA) to arrive at National Income (NNPFC). 
1 ½  
1  
½ 
 
 
 
1 
 
1 
 
 
 
1 
 
12. Tax revenue collection by the government may be categorized as: 
• Direct Taxes: It refers to those taxes whose impact and incidence 
lie on the same entity. In other words, the liability of paying direct 
taxes can’t be shifted. 
 
½ + 1  
 
 
½ + 1 
  
2 
 
• Indirect Taxes: It refers to those taxes whose impact and incidence 
may lie on different entities. In other words, the liability of paying 
indirect taxes can be shifted. 
13. (I) Foreign Portfolio Investments in India in the fiscal year 2023-24 will be     
recorded on the credit side of the capital account of the Balance of 
Payments (BOP) account.  
It is recorded on the credit side, as it results in the inflow of foreign 
exchange. Furthermore, such transactions are documented in the capital 
account as they reflect the change in the ownership of financial assets 
between the residents of a country and rest of the world. 
(II) Balance of Payments deficit occurs when autonomous receipts fall short 
of autonomous payments during a given fiscal year in an economy.  
 
 
3 
 
 
 
 
1 
 
14. 
(A) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Given consumption curve (C) intersecting 45
o
 line at B (Break-even level of 
income). Steps for derivation of saving curve from the consumption curve 
are as follows:  
1. Take OA on the negative intercept on Y-axis equals to OC (Autonomous 
consumption) having positive intercept on Y-axis, as a starting point of the 
saving curve.  
2. Draw a perpendicular from point B (where, Y=C) intersecting the X-axis 
at B’ (where S=0)
 
which is another point on the saving curve.  
3. Join point A to point B’ extending the line till point S to get the saving 
curve (AS). 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For Visually Impaired Candidates: 
Given consumption curve (C) intersecting 45
o
 line at B (Break-even level of 
income). Steps for derivation of saving curve from the consumption curve 
are as follows:  
1. Take OA on the negative intercept on Y-axis equals to OC (Autonomous 
consumption) having positive intercept on Y-axis, as a starting point of the 
saving curve.  
2. Draw a perpendicular from point B (where, Y=C) intersecting the X-axis 
at B’ (where S=0)
 
which is another point on the saving curve.  
3. Join point A to point B’ extending the line till point S to get the saving 
curve (AS). 
 
OR 
 
 
 
1 
 
 
1 
 
1 
 
 
 
 
 
 
1 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 
 
 
 
 
 
 
 
 
3 
 
14. 
(B) 
Given, 
Autonomous Consumption ( c ¯) = ? 40 crore 
Investment expenditure (I) = ? 100 crore 
For economy A, Marginal Propensity to Consume (MPC) = 0.6 
For economy B, Marginal Propensity to Consume (MPC) = 0.8 
(I) At break-even level for economy A; Y = C 
                                                              Y= 40 + 0.6Y 
                 0.4Y = 40 
                                                              Y= ? 100 crore 
(II) Equilibrium level of income for economy B; Y= C + I 
                                                                           Y= c ¯ + (MPC) x Y + I 
                                                                           Y= 40 + 0.8Y + 100 
                           Y= ? 700 crore 
 
 
 
 
 
½  
½ 
½ 
½ 
½  
½ 
½ 
½  
15. The working process of the increase in investment on the National Income, 
is based on the assumption that one’s expenditure is another’s income. 
In Round 1, the investment in infrastructure undertaken by the government 
of 1,000 crore, will generate an additional income by the like amount (1,000 
crore). Since Marginal Propensity to Save (MPS) is 0.2 i.e. MPC is 0.8  it 
will lead to an increase in the consumption expenditure by 800 crore (80% 
of 1,000) and saving by 200 crore (20% of 1,000). 
As one’s expenditure is another’s income, an increase in consumption 
expenditure results in an increase in income by 800 crore in the subsequent 
round. This process continues till the sum of the change in savings becomes 
equal to the change in the investment.  
Round 
Increase in 
investment  
( I ? )  
(in crore) 
Increase in 
income  
( Y ? ) 
(in crore) 
Increase in 
consumption 
( C ? ) 
(in crore) 
Increase 
in savings 
( S ? ) 
(in crore) 
1 
2 
3 
— 
1,000 
— 
— 
— 
1,000 
800 
640 
. 
800 
640 
512 
. 
200 
160 
128 
. 
Total 1,000 5,000 4,000 1,000 
Investment Multiplier = 
1
1 - MPC
 
                                   = 
1
1 - 0 . 8
 = 5 
Thus, the above schedule indicates that an increase in investment (?I) of 
1,000 crore leads to a total increase in national income (?Y) by 5,000 crore, 
which is 5 times the increase in investment. 
 
 
 
 
 
 
 
 
 
 
4 
16. (I) The evolution of money has taken place over the centuries in different 
forms such as: 
• Metal currencies: Gold or silver coins (which have intrinsic value) 
were used for economic transactions as these were used as 
standardised representation of value.   
 
 
½ + 1 
 
 
 
½ + 1 
Page 4


1 
 
ECONOMICS (030)     
CLASS XII (2024-25) 
MARKING SCHEME         
 
 Q.NO.    SECTION A – MACRO ECONOMICS   MARKS 
1. D. Assertion (A) is false, but Reason (R) is true. 1 
2. C. Redistribution of income 1 
3. B. Net Product Taxes 1 
4. B. flexible 1 
5. A. (i) 
For Visually Impaired Candidates: 
B. 45
0
 
1 
 
1 
6. B. fiscal 1 
7. A. Statement 1 is true and Statement 2 is false. 1 
8. D. Autonomous Consumption, Induced Consumption and Autonomous 
Investment 
1 
9. C. Both Statements 1 and 2 are true.  1 
10. C. deficit, 0.74 
For Visually Impaired Candidates: 
C. Receipts < Payments on current account  
1 
 
1 
11. 
(A) 
 
 
11. 
(B) 
Domestic Income (NDPFC)  = i + iv + ii + iii + vii + vi – v – x – viii 
                                            = 800+170+150+120+500+140–20 – 40 – 70 
                                            = ? 1,750 crore 
OR 
Steps pertaining to the estimation of National Income under the Income 
method:  
 1.    Identify and classify production units into distinct heads namely primary, 
secondary, and tertiary sector. 
 2. Estimate and classify the factor payments in different categories as 
Compensation of Employees, Operating Surplus, and Mixed Income. The 
sum of factor payments represents the contribution of the sectors to 
Domestic Income (NDPFC). 
 3.   Finally, estimate and add the value of Net Factor Income from Abroad 
(NFIA) to arrive at National Income (NNPFC). 
1 ½  
1  
½ 
 
 
 
1 
 
1 
 
 
 
1 
 
12. Tax revenue collection by the government may be categorized as: 
• Direct Taxes: It refers to those taxes whose impact and incidence 
lie on the same entity. In other words, the liability of paying direct 
taxes can’t be shifted. 
 
½ + 1  
 
 
½ + 1 
  
2 
 
• Indirect Taxes: It refers to those taxes whose impact and incidence 
may lie on different entities. In other words, the liability of paying 
indirect taxes can be shifted. 
13. (I) Foreign Portfolio Investments in India in the fiscal year 2023-24 will be     
recorded on the credit side of the capital account of the Balance of 
Payments (BOP) account.  
It is recorded on the credit side, as it results in the inflow of foreign 
exchange. Furthermore, such transactions are documented in the capital 
account as they reflect the change in the ownership of financial assets 
between the residents of a country and rest of the world. 
(II) Balance of Payments deficit occurs when autonomous receipts fall short 
of autonomous payments during a given fiscal year in an economy.  
 
 
3 
 
 
 
 
1 
 
14. 
(A) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Given consumption curve (C) intersecting 45
o
 line at B (Break-even level of 
income). Steps for derivation of saving curve from the consumption curve 
are as follows:  
1. Take OA on the negative intercept on Y-axis equals to OC (Autonomous 
consumption) having positive intercept on Y-axis, as a starting point of the 
saving curve.  
2. Draw a perpendicular from point B (where, Y=C) intersecting the X-axis 
at B’ (where S=0)
 
which is another point on the saving curve.  
3. Join point A to point B’ extending the line till point S to get the saving 
curve (AS). 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For Visually Impaired Candidates: 
Given consumption curve (C) intersecting 45
o
 line at B (Break-even level of 
income). Steps for derivation of saving curve from the consumption curve 
are as follows:  
1. Take OA on the negative intercept on Y-axis equals to OC (Autonomous 
consumption) having positive intercept on Y-axis, as a starting point of the 
saving curve.  
2. Draw a perpendicular from point B (where, Y=C) intersecting the X-axis 
at B’ (where S=0)
 
which is another point on the saving curve.  
3. Join point A to point B’ extending the line till point S to get the saving 
curve (AS). 
 
OR 
 
 
 
1 
 
 
1 
 
1 
 
 
 
 
 
 
1 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 
 
 
 
 
 
 
 
 
3 
 
14. 
(B) 
Given, 
Autonomous Consumption ( c ¯) = ? 40 crore 
Investment expenditure (I) = ? 100 crore 
For economy A, Marginal Propensity to Consume (MPC) = 0.6 
For economy B, Marginal Propensity to Consume (MPC) = 0.8 
(I) At break-even level for economy A; Y = C 
                                                              Y= 40 + 0.6Y 
                 0.4Y = 40 
                                                              Y= ? 100 crore 
(II) Equilibrium level of income for economy B; Y= C + I 
                                                                           Y= c ¯ + (MPC) x Y + I 
                                                                           Y= 40 + 0.8Y + 100 
                           Y= ? 700 crore 
 
 
 
 
 
½  
½ 
½ 
½ 
½  
½ 
½ 
½  
15. The working process of the increase in investment on the National Income, 
is based on the assumption that one’s expenditure is another’s income. 
In Round 1, the investment in infrastructure undertaken by the government 
of 1,000 crore, will generate an additional income by the like amount (1,000 
crore). Since Marginal Propensity to Save (MPS) is 0.2 i.e. MPC is 0.8  it 
will lead to an increase in the consumption expenditure by 800 crore (80% 
of 1,000) and saving by 200 crore (20% of 1,000). 
As one’s expenditure is another’s income, an increase in consumption 
expenditure results in an increase in income by 800 crore in the subsequent 
round. This process continues till the sum of the change in savings becomes 
equal to the change in the investment.  
Round 
Increase in 
investment  
( I ? )  
(in crore) 
Increase in 
income  
( Y ? ) 
(in crore) 
Increase in 
consumption 
( C ? ) 
(in crore) 
Increase 
in savings 
( S ? ) 
(in crore) 
1 
2 
3 
— 
1,000 
— 
— 
— 
1,000 
800 
640 
. 
800 
640 
512 
. 
200 
160 
128 
. 
Total 1,000 5,000 4,000 1,000 
Investment Multiplier = 
1
1 - MPC
 
                                   = 
1
1 - 0 . 8
 = 5 
Thus, the above schedule indicates that an increase in investment (?I) of 
1,000 crore leads to a total increase in national income (?Y) by 5,000 crore, 
which is 5 times the increase in investment. 
 
 
 
 
 
 
 
 
 
 
4 
16. (I) The evolution of money has taken place over the centuries in different 
forms such as: 
• Metal currencies: Gold or silver coins (which have intrinsic value) 
were used for economic transactions as these were used as 
standardised representation of value.   
 
 
½ + 1 
 
 
 
½ + 1 
4 
 
• Paper currency: Currency is issued in paper (or polymer) form by the 
Central Bank. It is a liability of the issuing Central Bank and an asset 
of the holding public. 
(II) Yes. The introduction of CBDC provides significant benefits such as 
reduced dependency on cash, lower transaction costs, and reduced 
settlement risk. It leads to a more robust, efficient, trusted, and regulated 
payment option. However, there are associated risks such as cyber-attacks 
and technology preparedness, but they need to be carefully evaluated 
against the potential benefits.  
 
 
 
3 
17. 
(A) 
 
 
 
 
 
 
 
 
 
 
 
17. 
(B) 
(I) Percentage change in Real GDP  =  Change in Real GDP    X 100 
                                                                  Real GDP  
                                                      = (4,500 – 4,000)  x 100  
                                                               4,000 
                                                      = 12.5 % 
(II) The public investment on the construction of a multi-lane flyover may 
impact the Gross Domestic Product (GDP) positively as good quality 
infrastructure (like an effective transport system) generally attracts higher 
investments in an economy and may lead to an increase in employment 
opportunities. It may also lead to a reduction in travel time and lower 
average transportation costs. Consequently, it may increase the well-being 
of citizens. 
OR 
(I) The given statement is defended. Consumption goods are those goods 
that directly satisfy the wants of the consumer whereas, capital goods are 
those final goods that are used for further production. 
A good can be considered as a consumption good or a capital good. It 
depends upon the economic nature of its use.  
For example, machinery purchased by a household can be classified as a 
consumption good whereas, if it is purchased by a firm for further 
production, then as a capital good. 
(II) The massive destruction of capital assets caused by the recent natural 
calamities in the hill states of Himachal Pradesh and Uttarakhand can be 
considered as capital loss.  
Capital loss refers to the loss in the value of fixed assets due to unforeseen 
circumstances like natural disasters, theft, fires, etc.  
1 ½  
 
1  
 
½  
 
3 
 
 
 
 
 
 
 
4 
 
 
 
 
 
 
 
2 
 
 
 
SECTION B – INDIAN ECONOMIC DEVELOPMENT 
18. A. (i) and (ii) 
For Visually Impaired Candidates: 
A. (i) only                                               
1 
 
1 
19. A. Statement 1 is true and Statement 2 is false. 1 
20. D. Assertion (A) is false, but Reason (R) is true. 1 
21. C. public and private sector 1 
22. D. (i), (ii), (iii), and (iv) 1 
23. D. Change in the role of the Reserve Bank of India from facilitator to 
regulator 
1 
Page 5


1 
 
ECONOMICS (030)     
CLASS XII (2024-25) 
MARKING SCHEME         
 
 Q.NO.    SECTION A – MACRO ECONOMICS   MARKS 
1. D. Assertion (A) is false, but Reason (R) is true. 1 
2. C. Redistribution of income 1 
3. B. Net Product Taxes 1 
4. B. flexible 1 
5. A. (i) 
For Visually Impaired Candidates: 
B. 45
0
 
1 
 
1 
6. B. fiscal 1 
7. A. Statement 1 is true and Statement 2 is false. 1 
8. D. Autonomous Consumption, Induced Consumption and Autonomous 
Investment 
1 
9. C. Both Statements 1 and 2 are true.  1 
10. C. deficit, 0.74 
For Visually Impaired Candidates: 
C. Receipts < Payments on current account  
1 
 
1 
11. 
(A) 
 
 
11. 
(B) 
Domestic Income (NDPFC)  = i + iv + ii + iii + vii + vi – v – x – viii 
                                            = 800+170+150+120+500+140–20 – 40 – 70 
                                            = ? 1,750 crore 
OR 
Steps pertaining to the estimation of National Income under the Income 
method:  
 1.    Identify and classify production units into distinct heads namely primary, 
secondary, and tertiary sector. 
 2. Estimate and classify the factor payments in different categories as 
Compensation of Employees, Operating Surplus, and Mixed Income. The 
sum of factor payments represents the contribution of the sectors to 
Domestic Income (NDPFC). 
 3.   Finally, estimate and add the value of Net Factor Income from Abroad 
(NFIA) to arrive at National Income (NNPFC). 
1 ½  
1  
½ 
 
 
 
1 
 
1 
 
 
 
1 
 
12. Tax revenue collection by the government may be categorized as: 
• Direct Taxes: It refers to those taxes whose impact and incidence 
lie on the same entity. In other words, the liability of paying direct 
taxes can’t be shifted. 
 
½ + 1  
 
 
½ + 1 
  
2 
 
• Indirect Taxes: It refers to those taxes whose impact and incidence 
may lie on different entities. In other words, the liability of paying 
indirect taxes can be shifted. 
13. (I) Foreign Portfolio Investments in India in the fiscal year 2023-24 will be     
recorded on the credit side of the capital account of the Balance of 
Payments (BOP) account.  
It is recorded on the credit side, as it results in the inflow of foreign 
exchange. Furthermore, such transactions are documented in the capital 
account as they reflect the change in the ownership of financial assets 
between the residents of a country and rest of the world. 
(II) Balance of Payments deficit occurs when autonomous receipts fall short 
of autonomous payments during a given fiscal year in an economy.  
 
 
3 
 
 
 
 
1 
 
14. 
(A) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Given consumption curve (C) intersecting 45
o
 line at B (Break-even level of 
income). Steps for derivation of saving curve from the consumption curve 
are as follows:  
1. Take OA on the negative intercept on Y-axis equals to OC (Autonomous 
consumption) having positive intercept on Y-axis, as a starting point of the 
saving curve.  
2. Draw a perpendicular from point B (where, Y=C) intersecting the X-axis 
at B’ (where S=0)
 
which is another point on the saving curve.  
3. Join point A to point B’ extending the line till point S to get the saving 
curve (AS). 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For Visually Impaired Candidates: 
Given consumption curve (C) intersecting 45
o
 line at B (Break-even level of 
income). Steps for derivation of saving curve from the consumption curve 
are as follows:  
1. Take OA on the negative intercept on Y-axis equals to OC (Autonomous 
consumption) having positive intercept on Y-axis, as a starting point of the 
saving curve.  
2. Draw a perpendicular from point B (where, Y=C) intersecting the X-axis 
at B’ (where S=0)
 
which is another point on the saving curve.  
3. Join point A to point B’ extending the line till point S to get the saving 
curve (AS). 
 
OR 
 
 
 
1 
 
 
1 
 
1 
 
 
 
 
 
 
1 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 
 
 
 
 
 
 
 
 
3 
 
14. 
(B) 
Given, 
Autonomous Consumption ( c ¯) = ? 40 crore 
Investment expenditure (I) = ? 100 crore 
For economy A, Marginal Propensity to Consume (MPC) = 0.6 
For economy B, Marginal Propensity to Consume (MPC) = 0.8 
(I) At break-even level for economy A; Y = C 
                                                              Y= 40 + 0.6Y 
                 0.4Y = 40 
                                                              Y= ? 100 crore 
(II) Equilibrium level of income for economy B; Y= C + I 
                                                                           Y= c ¯ + (MPC) x Y + I 
                                                                           Y= 40 + 0.8Y + 100 
                           Y= ? 700 crore 
 
 
 
 
 
½  
½ 
½ 
½ 
½  
½ 
½ 
½  
15. The working process of the increase in investment on the National Income, 
is based on the assumption that one’s expenditure is another’s income. 
In Round 1, the investment in infrastructure undertaken by the government 
of 1,000 crore, will generate an additional income by the like amount (1,000 
crore). Since Marginal Propensity to Save (MPS) is 0.2 i.e. MPC is 0.8  it 
will lead to an increase in the consumption expenditure by 800 crore (80% 
of 1,000) and saving by 200 crore (20% of 1,000). 
As one’s expenditure is another’s income, an increase in consumption 
expenditure results in an increase in income by 800 crore in the subsequent 
round. This process continues till the sum of the change in savings becomes 
equal to the change in the investment.  
Round 
Increase in 
investment  
( I ? )  
(in crore) 
Increase in 
income  
( Y ? ) 
(in crore) 
Increase in 
consumption 
( C ? ) 
(in crore) 
Increase 
in savings 
( S ? ) 
(in crore) 
1 
2 
3 
— 
1,000 
— 
— 
— 
1,000 
800 
640 
. 
800 
640 
512 
. 
200 
160 
128 
. 
Total 1,000 5,000 4,000 1,000 
Investment Multiplier = 
1
1 - MPC
 
                                   = 
1
1 - 0 . 8
 = 5 
Thus, the above schedule indicates that an increase in investment (?I) of 
1,000 crore leads to a total increase in national income (?Y) by 5,000 crore, 
which is 5 times the increase in investment. 
 
 
 
 
 
 
 
 
 
 
4 
16. (I) The evolution of money has taken place over the centuries in different 
forms such as: 
• Metal currencies: Gold or silver coins (which have intrinsic value) 
were used for economic transactions as these were used as 
standardised representation of value.   
 
 
½ + 1 
 
 
 
½ + 1 
4 
 
• Paper currency: Currency is issued in paper (or polymer) form by the 
Central Bank. It is a liability of the issuing Central Bank and an asset 
of the holding public. 
(II) Yes. The introduction of CBDC provides significant benefits such as 
reduced dependency on cash, lower transaction costs, and reduced 
settlement risk. It leads to a more robust, efficient, trusted, and regulated 
payment option. However, there are associated risks such as cyber-attacks 
and technology preparedness, but they need to be carefully evaluated 
against the potential benefits.  
 
 
 
3 
17. 
(A) 
 
 
 
 
 
 
 
 
 
 
 
17. 
(B) 
(I) Percentage change in Real GDP  =  Change in Real GDP    X 100 
                                                                  Real GDP  
                                                      = (4,500 – 4,000)  x 100  
                                                               4,000 
                                                      = 12.5 % 
(II) The public investment on the construction of a multi-lane flyover may 
impact the Gross Domestic Product (GDP) positively as good quality 
infrastructure (like an effective transport system) generally attracts higher 
investments in an economy and may lead to an increase in employment 
opportunities. It may also lead to a reduction in travel time and lower 
average transportation costs. Consequently, it may increase the well-being 
of citizens. 
OR 
(I) The given statement is defended. Consumption goods are those goods 
that directly satisfy the wants of the consumer whereas, capital goods are 
those final goods that are used for further production. 
A good can be considered as a consumption good or a capital good. It 
depends upon the economic nature of its use.  
For example, machinery purchased by a household can be classified as a 
consumption good whereas, if it is purchased by a firm for further 
production, then as a capital good. 
(II) The massive destruction of capital assets caused by the recent natural 
calamities in the hill states of Himachal Pradesh and Uttarakhand can be 
considered as capital loss.  
Capital loss refers to the loss in the value of fixed assets due to unforeseen 
circumstances like natural disasters, theft, fires, etc.  
1 ½  
 
1  
 
½  
 
3 
 
 
 
 
 
 
 
4 
 
 
 
 
 
 
 
2 
 
 
 
SECTION B – INDIAN ECONOMIC DEVELOPMENT 
18. A. (i) and (ii) 
For Visually Impaired Candidates: 
A. (i) only                                               
1 
 
1 
19. A. Statement 1 is true and Statement 2 is false. 1 
20. D. Assertion (A) is false, but Reason (R) is true. 1 
21. C. public and private sector 1 
22. D. (i), (ii), (iii), and (iv) 1 
23. D. Change in the role of the Reserve Bank of India from facilitator to 
regulator 
1 
5 
 
24. C. One Child Norm 1 
25. B. Central Pollution Control Board 1 
26. D. Jobless Growth 1 
    27. C. Operation Flood 1 
28. 
(A) 
 
 
 
 
 
28. 
(B) 
 
Disinvestment aimed to boost financial discipline and modernisation. The 
government exceeded its mobilisation target but assets of Public Sector 
Enterprises (PSEs) had been undervalued, resulting in significant losses to 
the government. Moreover, the proceeds were primarily used to cover 
shortfalls of government revenue instead of investing in social infrastructure 
or the development of PSE. 
OR 
Globalisation is indeed an essential outcome of liberalisation of an 
economy. The removal or reduction of restrictions in the industrial sector, 
financial sector, trade and investment policy etc. opened the doors of the 
Indian economy to the rest of the world.  
Hence, liberalisation acted as a catalyst for globalisation. It fostered 
international trade integrating the Indian economy with the global economy. 
 
3 
 
 
 
 
 
 
3 
29. Yes. Measurement of the development level in an economy is a 
comprehensive approach where liberty indicators should be considered 
along with other socio-economic parameters. 
Liberty indicators measure the extent of democratic participation in social 
and political decision-making. These indicators are significant as they reflect 
the degree of civil liberties, political rights and economic freedom within a 
society. With the incorporation of liberty indicators, policymakers can gain a 
more holistic understanding of an economy's development status. 
 
 
 
3 
30. The fast-paced economic growth in China can be traced back to the 
following reforms introduced in 1978: 
• In the initial phase, reforms were initiated in agriculture, foreign trade and 
investment sectors. For instance, in agriculture commune lands were 
divided into small plots, which were allocated to individual households. They 
were allowed to keep all income from the land after paying stipulated taxes. 
• In the subsequent phase, reforms were initiated in the industrial sector. 
Private sector firms, in general, and township and village enterprises, in 
particular, were allowed to produce goods. At this stage, State Owned 
Enterprises were made to face competition. 
 
 
 
2 
 
 
 
2 
 
31. 
(A) 
 
 
 
 
 
 
 
 
31. 
Under the Delhi Declaration, the G-20 member countries have agreed to 
elevate efforts to limit Global Warming. To achieve this, these nations have 
decided to reduce greenhouse gas emissions. 
It has been agreed to devise an effective approach to transitioning from 
conventional sources of energy to non-conventional sources of energy. 
Wind energy and solar power serve as good illustrations of environmental 
friendly sources of energy that contribute to achieving sustainable 
development. 
OR 
 
 
 
4