AHSEC Class 12 Economics Question Papers 2022 (For new course students)

AHSEC Class 12 Economics Question Papers 2022

Full Marks: 80
Pass Marks: 24
Time: Three Hours

The figures in the margin indicate full marks for the questions.

PART – A

1. (a) Define involuntary unemployment. 1

Ans: Involuntary unemployment refers to a situation where people who are able and willing to work at the existing wage rate cannot find work.

(b) What is effective demand? 1

Ans: Effective demand is the level of aggregate demand which is exactly equal to aggregate supply in an economy. It is the point where the equilibrium level of income is determined.

(c) What do you understand by depreciation of capital? 1

Depreciation refers to the fall in the value of fixed assets due to normal wear and tear, passage of time, or expected obsolescence over a period of time.

(d) GNP = GDP + NFIA. (Fill in the blank) 1

(e) What is foreign exchange market? 1

Ans: The foreign exchange market is the market in which national currencies of different countries are bought and sold for one another.

(f) Which of the following transactions are included in the current account of Balance of Payment? 1

(1) Import and Export of goods.

(2) Import and Export of services.

(3) Unilateral transfer.

(4) All of the above. (Choose the correct option)

Ans: (4) All of the above

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2. Write the difference between GDP at market price and GDP at factor cost. 2

Ans: GDP at Market Price: This refers to the total market value of all final goods and services produced within a country's borders. It includes the indirect taxes paid to the government and excludes the subsidies received by producers.

GDP at Factor Cost: This refers to the total payment made to the factors of production (land, labour, capital, and entrepreneur) for their contribution to production. It excludes indirect taxes and includes subsidies.

Write one similarity and one difference between intermediate goods and capital goods. 1+1=2

Ans: Similarity: Both intermediate goods and capital goods are used in the production process by firms rather than being consumed by households for personal satisfaction. They are both classified as "producer goods."

Difference:

Intermediate Goods: These are used up entirely or transformed during the production process in a single year and are included in the value of final product.

Capital Goods: These are fixed assets used in production for several years and do not get merged into the final product.

3. What do you understand by ‘Paradox of Thrift’? 2

Ans: The paradox of thrift is a concept which states that if everyone in the economy starts saving, the total value of savings in the economy will not increase; it may actually decrease or remain the same. This happens because increased saving leads to reduced consumption, which lowers aggregate demand, national income, and eventually total savings.

What is aggregate supply? Explain. 2

Ans: Aggregate Supply refers to the money value of the total flow of final goods and services available for purchase in an economy during an accounting year. In macroeconomics, Aggregate Supply is identical to the National Income of the country.

4. Write two differences between direct tax and indirect tax. 2

Ans. Following are the differences between direct tax and indirect tax:

Direct Taxes	Indirect Taxes
These taxes are imposed on income and wealth of people.	These taxes are imposed on goods and services.
These taxes cannot be shifted on to other persons.	These taxes can be shifted on to other persons.
These taxes are progressive in nature. The rate of tax increases as the tax base increases.	These taxes are often non-progressive.

5. What are the components of high-powered money? 2

Ans. The components of High powered Money are:

- Currency in the hands of the public.

- Cash reserve of the commercial banks.

- Other deposits of RBI. Symbolically: H = C + R + OD

Define Bank Rate and Cash Reserve Ratio. 1+1=2

Ans: Bank rate is the rate of interest at which the central bank lends money to commercial banks in times of financial crisis.

Cash reserve ratio: Every scheduled bank in India is required to maintain a minimum percentage of their deposits with the RBI which is known as cash reserve ratio.

6. Write two differences between Balance of Payment and Balance of Trade. 2

Ans: Following are the differences between balance of payment and balance of trade:

Basis	Balance of Trade	Balance of Payments
Meaning	The balance of exports and import of the product and services is termed as Balance of Trade.	The balance of payments of a country is a systematic record of all its economic transactions with the outside world in a given year.
Recording of transactions	It records transactions relating to goods only.	It records transactions relating to both goods and services.

7. Write in brief the ideas of fixed exchange rate and flexible exchange rate. 2

Ans: Fixed exchange rate which is officially fixed in term of gold or any other currency by the government. Fixed exchange rate promotes international trade.

Flexible exchange rate is that rate which is determined by the forces of demand and supply of foreign exchange.

8. What is investment multiplier? If a new investment of Rs. 300 crore increases National Income by Rs. 1,200 crores, calculate the value of investment multiplier. In this case, what will be the value of MPC? 1+1+2=4

Briefly discuss the components of aggregate demand. 4

Ans: Components of Aggregate Demand: In a modern macro economy, Aggregate Demand consists of the following four components:

1. Private Household Consumption Expenditure (C): This refers to the total planned expenditure by households on food, clothing, housing, and other services to satisfy their personal wants. It is directly influenced by the level of disposable income.

2. Investment Expenditure (I): This refers to the planned expenditure by private firms on new capital assets like machinery, equipment, and construction of factories. In the basic Keynesian model, this is often assumed to be "Autonomous Investment" (independent of the level of income).

3. Government Expenditure (G): This includes the planned expenditure by the government on providing public services like education, health, transport, and defense. It includes both consumption expenditure (salaries) and investment expenditure (building roads).

4. Net Exports (X – M): This is the difference between the demand for domestic goods by foreigners (Exports) and the demand for foreign goods by domestic residents (Imports).

Net Exports = Exports (X) – Imports (M)

The AD Equation: In a four-sector (open) economy, the formula is: AD = C + I + G + (X – M)

9. Write the differences between the following concepts: (any two) 2+2=4

(a) Autonomous investment and Induced investment.

Ans: Autonomous investment refers to the investment which is independent of the level of national income. It is not influenced by the motive of profit-making.

Induced investment refers to the investment which is dependent on the level of national income and is driven by the profit motive.

(b) Ex-ante consumption and Ex-post consumption.

Ans: Ex-ante Investment: It refers to the amount of investment which firms or entrepreneurs plan or intend to invest at different levels of income in the economy during a particular period.

Ex-post Investment: It refers to the actual or realized level of investment in the economy during a year. It is the sum of planned investment and unplanned changes in inventory.

(c) Marginal propensity to consume and Marginal propensity to save.

Ans: Marginal Propensity to Consume (MPC): MPC is the ratio of the change in consumption to the change in total income. It shows how much of every extra rupee earned is spent on consumption.

Formula to Calculate MPC = ΔC / ΔY (Where ΔC = Change in Consumption, ΔY = Change in Income)

Marginal Propensity to Save (MPS): MPS is the ratio of the change in savings to the change in total income. It shows how much of every extra rupee earned is kept as savings.

Formula to calculate MPS = ΔS / ΔY (Where ΔS = Change in Saving, ΔY = Change in Income)

(d) Marginal propensity to consume and Average propensity to consume.

Ans: Marginal Propensity to Consume (MPC): MPC is the ratio of the change in consumption to the change in total income. It shows how much of every extra rupee earned is spent on consumption.

Average Propensity to Consume (APC): APC is the ratio of total consumption to total income at a specific point in time. It indicates the percentage of total income that is spent on consumption.

Formula: APC = C / Y. Here C = Total Consumption expenditure and Y = Total National Income.

10. Discuss four main functions of Central Bank. 4

Ans: The functions of RBI are:

1. Note Issue: The reserves bank of India is the sole authority for the issue of currency in India other than one rupee coins/notes and subsidiary coins. The RBI has adopted the minimum reserves system of note issue to issue currency notes in the country. Under this system the RBI maintains a minimum reserve of Rs. 200 crores of which Rs. 115 crores are in gold and the rest in securities. The issue department of RBI has the responsibility to issue paper money. It is responsible for getting its periodical requirements of notes printed from the currency presses of the Government of India, distribution of currency among the public and withdrawal of unserviceable notes and coins from circulation. The Issue Department deals directly with the public in exchange of currency for coins and vice versa and exchange of notes of one denomination for another.

2. Bankers to Government: The RBI acts as banker to the Central and State Government as a banker as an adviser as an agent into their capacities:

a) As a banker.

b) As an agent.

c) As an advisor.

As a Government banker the RBI performs the following functions: -

a) It maintains and operates deposit account of the central and state governments.

b) It receives and collects payment on behalf of the Central and state governments.

c) It makes payments on behalf of the central and state governments.

d) It provides short term advances to government for which are called ways and means advances etc.

As a Government agent the RBI perform the followings functions: -

a) Collect tax and other payments on behalf of the government.

b) Raise loan from the public and thus manages public debts.

c) Transfer funds and provide remittances facilities to the government etc.

As an adviser the RBI acts as an advising the Government on all financial matters such as loan separations investment, agricultural and industrial finance, banking planning etc. It also advices to promote the attainment of the national economic goals.

1. Bankers Bank: The Central Bank is a banker to all the other banks. It is the supreme bank of all the banks. As the supreme bank it performs various functions. Some of the functions are:

a) Custodian of cash reserve of the bank: The Central Bank acts as the custodian of cash reserve of the banks. Every Commercial bank has to keep a certain portion of their deposits and time and demand liabilities to the Central Bank in the form of cash reserves. The Central Bank maintains this cash reserve as the custodian and grants money to the commercial bank in times of emergency.

b) Lender of the last resort (2017): The Central Bank is the Lender of the last resort of the commercial banks. When the other banks shortage of funds, then they can approach to the Central Bank for financial assistance. The Central Bank lends money to them by discounting their bills. This enables the Central Bank to establish control over the banking system of the country. The RBI is ultimate source of money and credit provide fund to money market participate thus the RBI act as lender of last resort for the commercial banks.

c) Clearing agent (2018): In India the central clearing functions is managed by the RBI or the SBI is authorized to manage clearing house functions every day. Each commercial bank receives a number of cheques for collection from other banks on account of their customers. One bank may have to pay certain amount to another bank again the RBI will transfer fund from debtor to creditors account. Since all banks have their accounts with the RBI, the RBI can easily settle the claims of various banks each other with least use of cash. The clearing house functions of RBI are:

Ø For settlement of banking transactions between two banks.

Ø To helps in economizing the uses of cash by banks.

Ø Look-over the liquidity position of the bank.

2. Control of credit: As a central bank, the RBI take the responsibility to control of credit in order to economic development and price stability in the country under credit control policy different method are used to control the volume of credit in the economy. Important of them are General Credit Control and Selective Credit Control.

3. Custodian of gold and foreign exchange reserves: - The RBI act as a custodian of gold and foreign exchange reserves for both on its own and on behalf of the Government.

Explain how commercial banks create credit. 4

Ans: The banks create secondary deposits or derivation from the primary deposits. This creation of derivative deposits is known as Credit Creation.

Process of Credit Creation: Commercial banks receive deposits from the public (Primary Deposits). They keep a certain percentage of these deposits as reserves (Cash Reserve Ratio) as mandated by the Central Bank and lend the remaining amount. This lent amount is not given in cash but deposited into a new account, creating a "Secondary" or "Derivative" deposit. This cycle continues through the banking system, leading to total credit creation that is several times the initial deposit.

11. Discuss the components of Government Budget. 4

Ans: Government budget comprises of two parts: 1. Revenue Budget 2. Capital Budget

1. Revenue Budget: This deals with the day-to-day functional activities of the government that do not create liabilities or reduce assets.

Revenue Receipts: Money received that doesn't create a liability or reduce assets (e.g., Tax revenue like GST/Income Tax, and Non-tax revenue like interest, fees, and fines).

Revenue Expenditure: Spending that doesn't create assets or reduce liabilities (e.g., payment of salaries, pensions, interest payments, and subsidies).

2. Capital Budget: This deals with the assets and liabilities of the government. These transactions lead to a change in the total stock of capital.

Capital Receipts: Receipts that either create a liability or reduce an asset (e.g., Borrowings, recovery of loans, or Disinvestment/selling shares of public companies).

Capital Expenditure: Spending that either creates an asset or reduces a liability (e.g., construction of roads, buying machinery, or repayment of old loans).

Define the following: 1+1+1+1=4

(1) Fiscal Deficit.

Ans: Fiscal deficit is defined as excess of total expenditure over total receipts excluding borrowings during a fiscal year.

(2) Primary Deficit.

Ans. Primary deficit is defined as fiscal deficit minus interest payment on previous borrowings. Primary deficit = Fiscal deficit – Interest payments.

(3) Planned governmental expenditure.

Ans: Planned expenditure refers to the spending incurred on specific programs and schemes mentioned in the government's development plans. It is directed toward increasing the productive capacity of the economy.

(4) Non-planned government expenditure.

Ans: Non-planned expenditure refers to the routine spending of the government on essential services that are not part of the specific "plan" projects. It is generally incurred on the maintenance of existing services and the day-to-day running of the country.

12. Explain how GDP is calculated using Income method. 6

Ans: The income method of calculating national income is also called the factor income method or factor share method. This method measures national income from distribution side i.e. the national income is measured after it has been distributed and appears as income earned by individuals in the country. To estimate the national income by this approach, the total sum of the factor payments received during a given period is estimated. The factors of production are classified as land, labor, capital and organization. Accordingly, the national income is calculated as the sum of various factor payments like rent, wages, interest and profits plus depreciation.

Thus, National income = Rent + Wages + Interest + Profits + Depreciation

This method of estimating national income is of great advantage as it shows the distribution of national income among different income groups such as landlords, capitalists, workers, etc. It is therefore called national income by distributive shares.

Precautions: While estimating national income through income method the following precautions should be taken:

1. Transfer payments are not included in estimating national income through this method.

2. Imputed rent of self-occupied houses are included in national income as these houses provide services to those who occupy them and its value can be easily estimated from the market value data.

3. Illegal money such as hawala money, money earned through smuggling etc. are not included as they cannot be easily estimated.

4. Windfall gains such as prizes won, lotteries are also not included.

Discuss the reasons why GDP can’t be used as an index of country’s welfare. 6

Ans: Generally, a higher Gross Domestic Product (GDP) is considered a sign of a successful economy. However, GDP is not a perfect indicator of the welfare (well-being) of a nation. While it measures the total value of goods and services produced, it fails to capture the quality of life for everyone.

Limitations of GDP as a Welfare Indicator:

a) Distribution of GDP: If GDP increases, it does not mean that every person's income has increased. If the rise in GDP is concentrated in the hands of a few rich people, the welfare of the majority may not improve. Thus, GDP ignores the inequality in income distribution.

b) Non-Monetary Exchanges: In many developing countries like India, many productive activities are not paid for in money. Since GDP only counts market transactions, it underestimates the actual level of economic activity and welfare.

c) Composition of GDP: GDP counts the total production, regardless of what is being produced. If a nation increases production of harmful goods like tobacco, liquor, or weapons, the GDP will rise, but the social welfare of the people will likely decrease.

d) Externalities: GDP ignores "externalities"—the side effects of production. For example, a factory increases GDP by producing goods but also creates pollution that harms public health. Since GDP does not subtract the cost of environmental damage, it provides a misleading picture of welfare.

e) Growth of Population: If the rate of population growth is higher than the rate of growth of GDP, the per capita availability of goods and services will decrease, leading to a fall in the standard of living despite a rising total GDP.

PART – B

13. (a) Define sustainable development. 1

Ans: Sustainable development is a strategy for growth that balances economic progress with environmental protection. It aims to improve the living conditions of the current generation without depleting the natural resources needed by future generations.

(b) During British rule, decay of Indian handicrafts was caused by – 1

(1) Discriminatory tariff policy of the British Government.

(2) Competition from machine-made products.

(3) Change in patterns of demand.

(4) All of the above. (Choose the correct option)

Ans: (4) All of the above

(c) In which year the NITI Aayog was formed? 1

Ans: NITI Aayog was formed on January 1, 2015.

(d) What is the difference between ‘Labour Force’ and ‘Work Force’? 1

Ans: Labour Force: Includes everyone who is able and willing to work (this includes both people who have jobs and people who are looking for jobs).

Work Force: Includes only those people who are actually employed or working at a given time.

(e) Mention one similarity of the economic policies adopted by India and Pakistan. 1

Ans: Both India and Pakistan adopted the Mixed Economy model, where both the public sector (government) and the private sector coexist and work together for economic growth.

(f) The ‘Great Leap Forward’ campaign in China focused on – 1

(1) Privatisation.

(2) Widespread industrialisation.

(3) Development of services sector.

(4) Economic reform. (Choose the correct option)

Ans: (2) Widespread industrialisation.

14. Mention two major industrial sector reforms in the Indian economy under the policy of liberalisation. 2

Ans: Industrial Sector Reforms:

- Abolition of Industrial Licensing: Licensing was removed for almost all projects except for a few industries like alcohol, cigarettes, and hazardous chemicals.

- De-reservation of Public Sector: The number of industries reserved exclusively for the public sector was reduced (initially to 8, then further to 2: Railways and Atomic Energy).

Write about two positive effects of LPG policies in the Indian economy. 2

Ans: 1. Increase in Industrial production, 2. Flow of private foreign investment.

15. Write two merits of GST. 2

Ans: 1. Elimination of "Tax on Tax": GST removes the cascading effect of taxes through the Input Tax Credit system.

2. Simplified Tax Structure: It replaced multiple indirect taxes with "One Nation, One Tax,".

What is demonetisation? Mention one positive effect of demonetisation in the Indian economy. 2

Ans: Demonetisation is the act of stripping a currency unit of its status as legal tender. It occurs when the national currency is changed—the current form of money is pulled from circulation and replaced with new notes or coins.

Curbing Black Money: Demonetisation helps in identifying and eliminating "black money" (unaccounted income) held in the form of high-value cash.

16. What is structural composition of an economy? As on 2021, which sector contributed highest to the GDP of India? 1+1=2

Ans: Structural composition refers to the sectoral distribution of an economy, showing the contribution made by each sector (Primary/Agriculture, Secondary/Industrial, and Tertiary/Services) to the total Gross Domestic Product (GDP) and the percentage of the labour force employed in each sector.

As of 2021, the Services Sector (Tertiary Sector) contributed the highest to the GDP of India, accounting for over 53% of the total GVA (Gross Value Added).

Write two characteristics of small-scale industries. 2

Ans: Characteristics of Small-Scale Industries (SSI):

1. Labour Intensive: SSIs use more labour than capital (machines). They are a major source of employment, especially in rural areas, as they use simple technology and human skills.

2. Locational Flexibility: Unlike large-scale industries that need to be near raw materials or ports, SSIs can be set up almost anywhere. This helps in the balanced regional development of the country.

17. Write two differences between economic infrastructure and social infrastructure. 2

Basis	Economic Infrastructure	Social Infrastructure
Focus	Directly supports the production system and economic growth.	Indirectly supports the economy by improving human productivity.
Examples	Energy, Transport (Roads/Railways), and Communication.	Education, Health, and Housing.

Write about two problems faced by the power sector in India. 2

Ans: Two Problems of the Power Sector in India

1. Inadequate Generation Capacity: The electricity produced is insufficient to meet the rising demand of the growing population and industries, resulting in frequent power shortages.

2. Transmission and Distribution (T&D) Losses: A significant portion of power is wasted during transit due to outdated technology, poor maintenance, and electricity theft.

18. Write any two measures undertaken by the Government of India to improve agricultural marketing. 2

Ans: Following are some of the measures to improve the system agricultural marketing in the country:

1. Regulated Markets: Establishing markets where fair price discovery happens under the supervision of a Market Committee.

2. Infrastructure Development: Expanding storage, cold storage, and warehousing facilities at the village and city levels.

What do you understand by diversification of agriculture? 2

Ans: This means the excess of people in agriculture can be given gainful employment in some other allied activities in agriculture and non-farm activities. This is done in order to overcome poverty, improve employment and make rural agricultural people fully employed. Diversification includes two aspects.

a. Diversification of crop production: This involves shift from single cropping system to multiple cropping system. The main aim is to promote shift from subsistence farming to commercial farming.

b. Diversification of Productive Activities: As agricultural is already overcrowded, the major portion of the increasing labour force needs to find alternate employment opportunities in other non-farm sectors.

19. What are the three main approaches undertaken by Government of India to alleviate poverty? 2

Ans: Three approaches to alleviate poverty:

a) Growth-Oriented Approach: Focusing on increasing GDP and per capita income with the expectation that the benefits will reach to the poor.

b) Poverty Alleviation Programmes: Direct intervention through self-employment and wage-employment schemes (e.g., MGNREGA).

c) Minimum Basic Amenities: Providing essential services like subsidized food (PDS), health, education, and sanitation to improve the quality of life.

Write a short note on MGNREGA. 2

Ans: Launched in 2005, MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) guarantees 100 days of unskilled manual work per year to every rural household. It aims to enhance livelihood security and create durable assets like roads and ponds. If the government fails to provide work within 15 days, applicants receive an unemployment allowance.

20. Discuss the goals of planning in India. 4

Ans: The goals or objectives of planning in India are as follows:

(i) Growth: It refers to increase in the country’s capacity to produce the output of goods and services within the country. It implies either a large stock of productive capital or an increase in the efficiency of productive capital.

(ii) Modernization: It is necessary to adopt new technology in order to increase production of goods & services. Adoption of new technology is called modernization.

(iii) Self-reliance: It refers to utilization of country’s resources in order to promote economic growth and modernization without using the resources imported from other countries. It means avoiding imports of those goods which could be produced in India itself.

(iv) Equity: It means equal distribution of income and wealth among the societies. It is important to ensure that the benefits of economic development should reach the poor sections of the society as well.

Briefly discuss two positive and two negative impacts of Green Revolution. 2+2=4

Ans: Positive impact of Green revolution

a) Introducing high yield varieties of seeds,

b) Making fertilisers and insecticide more widely available,

Negative Impacts of Green Revolution

a) Environmental Degradation: Excessive use of chemical fertilizers and pesticides led to soil infertility. Additionally, over-irrigation resulted in the depletion of the groundwater table.

b) Inter-Regional Disparity: The benefits were largely confined to prosperous states like Punjab and Haryana, leaving other regions behind and widening the economic gap between states.

21. Write a comparative note on the demographic indicators for India, China and Pakistan. 4

Ans: Demographic Indicators: Demographic indicators reflect the population characteristics of the three countries:

- Population Size: China is the most populous, followed closely by India. Pakistan’s population is significantly smaller (approx. 20 crores).

- Population Growth: China has the lowest population growth rate due to its strict "One-child norm" introduced in the 1970s. Pakistan has the highest growth rate and a very high fertility rate.

- Density of Population: India and Pakistan have a high density of population because of their smaller land areas compared to China. China has the lowest density despite its large population.

- Urbanisation: Both China and Pakistan have a high degree of urbanisation compared to India, where a larger proportion of the population still resides in rural areas.

(a) Write two reasons for rapid economic development in China. 2

Ans: Two Reasons for China's Rapid Economic Development

- Economic Reforms (1978): China introduced "The Open Door Policy," shifting from a command economy to a market-driven one. This encouraged foreign investment and private entrepreneurship.

- Great Leap Forward (GLF): This campaign focused on massive industrialization by encouraging people to set up household industries and transforming the agrarian economy into an industrial power.

(b) Write two reasons for slow economic growth in Pakistan. 2

Ans: 1. Political Instability: Frequent changes in government and internal conflicts have hindered long-term economic planning and implementation.

2. Over-dependence on Remittances and Foreign Aid: Instead of building a strong industrial base, the economy has relied heavily on money sent from abroad, which is volatile and unsustainable.

22. Write about different types of unemployment. 4

Ans: Types of unemployment:

1. Disguised unemployment is a situation when the no. of workers engaged in a job is much more than actually required. If some of them are withdrawn from job, total production will not get affected.

2. Seasonal Unemployment-work in agriculture is seasonal, no employment opportunity for remaining months.

3. Frictional Unemployment - when a person moves from one job to other, but in the process of change may remain unemployed for sometimes.

4. Structural unemployment- it occurs due to structural changes in the economy structural changes is of two types - Changes in technology and Change in demand.

5. Cyclic Unemployment- Due to Business cycles.

23. Is economic growth, a cause of environmental degradation? Justify your answer. 4

Ans: Yes, economic growth is often a major cause of environmental degradation. While growth increases the production of goods and services, it frequently happens at the cost of natural resources. Some of the negative impacts of economic growth on environment are:

1. Depletion of Natural Resources: Rapid economic growth requires a continuous supply of raw materials. Over-exploitation of forests, minerals, and water bodies to fuel industries leads to the exhaustion of non-renewable resources.

2. Pollution and Waste Generation: Higher production levels lead to increased emissions of greenhouse gases and industrial waste. This results in air, water, and soil pollution, contributing to global warming and health hazards.

3. Loss of Biodiversity: Expansion of industrial units and urban infrastructure (roads, buildings) often requires clearing natural habitats. This disrupts ecosystems and leads to the extinction of various plant and animal species.

4. Pressure on Carrying Capacity: Environment has an ability to absorb waste and regenerate resources. When economic growth exceeds this limit, the environment fails to perform its life-sustaining functions, leading to an environmental crisis.

(a) Write two causes of global warming. 2

Ans: 1. Burning of Fossil Fuels: The large-scale burning of coal, petroleum, and natural gas in industries and vehicles releases massive amounts of Carbon Dioxide, which is a primary greenhouse gas that traps heat in the atmosphere.

2. Deforestation: Cutting down forests reduces the number of trees available to absorb Carbon Dioxide from the air. This leads to an increased concentration of greenhouse gases, contributing to the "Greenhouse Effect."

(b) Suggest two measures for attaining sustainable development in India. 2

Ans: To achieve sustainable growth, the following strategies should be implemented:

1. Use of Non-Conventional Sources of Energy: Transitioning from thermal and hydropower to solar, wind, and tidal energy reduces carbon emissions. These are cleaner and greener technologies that do not deplete natural resources.

2. Promotion of Cleaner Fuels:

- In Urban Areas: The use of CNG (Compressed Natural Gas) as fuel in public transport significantly lowers air pollution.

- In Rural Areas: Promoting LPG and Gobar Gas (biogas) reduces the dependence on wood, preventing deforestation and reducing indoor air pollution.

24. What is organic farming? Discuss its merits and demerits. 1+5=6

Ans: Meaning of Organic Farming: Organic farming is the process of producing food naturally. This method avoids the use of synthetic chemical fertilizers. It is very eco-friendly and very essential for sustainable development. It has a zero impact on environment.

Role in Sustainable Development: It is very eco-friendly and essential for sustainable development because it has a zero impact on the environment. It maintains soil health and ecological balance, ensuring that the needs of the present are met without compromising the ability of future generations to meet their own needs.

Merits of Organic Farming:

a) Cheaper Inputs: It substitutes costlier chemical fertilizers with cheaper organic inputs like compost and cattle dung.

b) Income through Exports: It generates income through export as the demand for organically grown crops is on the rise globally.

c) Healthy and Nutritional Food: It provides healthy food as organically grown food is pesticide-free and has more nutritional value compared to chemically grown food.

d) Employment Opportunities: Organic farming is more labor-intensive than conventional farming, thus providing more employment opportunities in India.

Limitations of Organic Farming:

a) Lower Initial Yield: The yields from organic farming are less than modern agricultural farming in the initial years, making it difficult for small farmers to adapt.

b) Inadequate Infrastructure: There is a lack of proper infrastructure and marketing facilities specifically designed for organic products.

c) Shorter Shelf Life: Organic produce tends to have a shorter shelf life compared to chemically treated crops.

d) Appropriate policy: An appropriate agricultural policy should be brought in for organic farming.

e) Lack of acceptability: Organic farming needs to be popularized by creating awareness and willingness on the part of the farmers for adoption of new methods.

What is Human Capital? Discuss the sources of human capital formation. 1+5=6

Ans: Meaning of Human Capital: Human capital refers to the stock of skill, ability, expertise, education, and knowledge embodied in the people of a country. Human Capital Formation is the process of acquiring and increasing the number of persons who have the skills and experience necessary for the economic and political development of a country.

Sources of Human Capital Formation:

a) Expenditure on Education: This is the most important source. It increases future income and efficiency.

b) Expenditure on Health: A sick labourer is less productive than a healthy one. Investment in health includes preventive and curative medicine.

c) On-the-job Training: Firms provide training to workers to increase their technical skills and productivity.

d) Migration: People migrate from rural to urban areas or to other countries in search of better jobs. The increased earnings outweigh the cost of migration.

e) Expenditure on Information: Knowing about labour markets and educational opportunities helps people make informed decisions to increase their productive potential.

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AHSEC Class 12 Economics Question Papers 2022 (For new course students)