CBSE 12 Economics Question Paper-2018 by Pavan | Practice Test to Test Your Knowledge
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  3. CBSE 12 Economics Question Paper-2018
CBSE 12 Economics Question Paper-2018

CBSE 12 Economics Question Paper-2018

This mock test includes actual CBSE Class 12 Economics board exam questions from the year 2018, helping students understand exam trends and practice real paper format

2025-08-05
Pavan Pavan
CBSE Class 12 Economics 2018 Grade 12

Duration

30 min

Questions

30

Marking

Negative

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Questions Preview

When the Average Product (AP) is maximum, the Marginal Product (MP) is:

A
Equal to AP
B
Less than AP
C
More than AP
D
Can be any one of the above

When the total fixed cost of producing 100 units is < 30 and the average variable cost < 3, total cost is:

A
< 3
B
< 30
C
< 270
D
< 330

State one example of positive economics.

A
The study of how an economy operates
B
The study of governmental policies
C
The analysis of unemployment rates
D
None of the above

What is meant by inelastic demand? Compare it with perfectly inelastic demand.

A
Inelastic demand means the quantity demanded does not change with price; perfectly inelastic means it remains constant regardless of price.
B
Inelastic demand changes with price, while perfectly inelastic remains constant.
C
Both are types of elastic demand.
D
None of the above.

What is meant by price ceiling? Explain its implications.

A
A price ceiling is a government-imposed limit on the price charged for a product.
B
A price ceiling is a limit set by consumers on the price of a product.
C
Price ceilings help to increase demand while lowering supply.
D
Price ceilings have no effect on the market.

Given the price of a good, how will a consumer decide as to how much quantity to buy of that good? Explain.

A
A consumer will buy more if the price is lower and less if the price is higher.
B
A consumer will always buy the same quantity, regardless of price.
C
A consumer will purchase according to their income level, not price.
D
A consumer’s decision is influenced by price elasticity.

When the price of a commodity changes from < 4 per unit to < 5 per unit, its market supply rises from 100 units to 120 units. Calculate the price elasticity of supply. Is supply elastic? Give reason.

A
The price elasticity of supply is 1, and the supply is elastic.
B
The price elasticity of supply is 0.5, and the supply is inelastic.
C
The price elasticity of supply is 2, and the supply is elastic.
D
The price elasticity of supply is 0.25, and the supply is perfectly inelastic.

What is Indifference Curve? State three properties of indifference curves.

A
Indifference curves represent combinations of goods that give a consumer the same level of satisfaction.
B
Indifference curves are straight lines.
C
Indifference curves always slope upward.
D
Indifference curves do not reflect consumer preference.

What is meant by price ceiling? Explain its implications.

A
A price ceiling is a government-imposed limit on the price charged for a product.
B
A price ceiling is a limit set by consumers on the price of a product.
C
Price ceilings help to increase demand while lowering supply.
D
Price ceilings have no effect on the market.

Explain the conditions of producer’s equilibrium in terms of marginal revenue and marginal cost.

A
The producer is in equilibrium when marginal revenue equals marginal cost.
B
The producer is in equilibrium when total cost is greater than total revenue.
C
The producer is in equilibrium when marginal revenue is greater than marginal cost.
D
The producer is in equilibrium when total profit is maximized.

What is the definition of money supply?

A
The total amount of money in circulation in an economy at a given time.
B
The total currency printed by the central bank.
C
Only physical currency in the economy.
D
The amount of money deposited in commercial banks.

Why does the consumption curve not start from the origin?

A
Because consumption depends on income and not just on price.
B
Because it reflects average income and not total income.
C
Consumption is independent of price and starts from a fixed point.
D
Consumption increases only when income increases.

What is the central bank's role in increasing the availability of credit?

A
By lowering the repo rate
B
By buying government securities
C
By raising the reverse repo rate
D
By selling government securities

Define money supply.

A
The total amount of money in circulation in an economy.
B
Only physical currency printed by the central bank.
C
Deposits in the central bank.
D
The total income of the economy.

What is an inflationary gap?

A
It is the gap between current national income and the potential income.
B
It refers to the decrease in demand in an economy.
C
It is the difference between actual output and full employment output.
D
It is when inflation causes reduced consumption.

Explain the role of the Reserve Bank of India as the lender of last resort.

A
The RBI provides emergency funds to banks in case of financial crisis.
B
The RBI regulates interest rates.
C
The RBI monitors inflation rates.
D
The RBI manages the national budget.

What is meant by the aggregate demand?

A
The total demand for goods and services within an economy.
B
The total supply of goods and services within an economy.
C
The demand for money in an economy.
D
The total government expenditure in an economy.

Calculate the Net National Product at market price using the given data.

A
Net National Product is calculated by deducting indirect taxes from Gross National Product.
B
Net National Product is calculated by adding the consumption of fixed capital to GDP.
C
Net National Product is the sum of all wages, profits, rents, and interest.
D
Net National Product is derived from the GDP minus subsidies.

Explain the fiscal deficit.

A
A fiscal deficit is the difference between the total government expenditure and total government revenue.
B
A fiscal deficit occurs when the government borrows money to finance capital projects.
C
A fiscal deficit is the total amount of taxes collected by the government.
D
A fiscal deficit occurs when government savings are higher than its investments.

What is the difference between Revenue Deficit and Fiscal Deficit?

A
Revenue Deficit occurs when revenue is lower than expenses, while Fiscal Deficit occurs when total expenditure exceeds total revenue.
B
Revenue Deficit only considers taxes, whereas Fiscal Deficit includes all types of income.
C
Revenue Deficit is the total amount of debt, while Fiscal Deficit refers to government surplus.
D
Revenue Deficit refers to the income from exports, while Fiscal Deficit is about government spending.

How does an increase in exchange rate impact national income?

A
An increase in exchange rate can lead to higher exports and a rise in national income.
B
An increase in exchange rate reduces imports and decreases national income.
C
An increase in exchange rate leads to a reduction in foreign direct investment.
D
An increase in exchange rate results in inflationary pressure.

What is meant by inflationary gap?

A
It is the difference between actual national income and the potential national income.
B
It refers to when the inflation rate exceeds the government target.
C
It is the gap in consumer demand during periods of recession.
D
It refers to the decrease in supply of essential goods.

Explain the revenue deficit.

A
Revenue deficit occurs when the government's current revenue falls short of its current expenditure.
B
Revenue deficit is when the total tax revenue is insufficient for government projects.
C
Revenue deficit is the excess of government savings over its total income.
D
Revenue deficit refers to deficits in the social security funds.

What is meant by the aggregate demand?

A
Aggregate demand is the total demand for goods and services within an economy at a given price level.
B
Aggregate demand refers to the total government expenditure.
C
Aggregate demand includes only the demand for goods produced within the country.
D
Aggregate demand refers to foreign demand for national goods.

What is meant by fiscal deficit?

A
Fiscal deficit is the difference between the total government expenditure and the total revenue from all sources.
B
Fiscal deficit refers to the revenue from taxes minus government spending.
C
Fiscal deficit occurs when the government has surplus funds from taxes.
D
Fiscal deficit is the difference between the budgeted income and expenses.

What is meant by aggregate supply?

A
Aggregate supply is the total supply of goods and services that producers in an economy are willing to supply at a given overall price level.
B
Aggregate supply refers to the total demand for goods and services in the economy.
C
Aggregate supply is only the supply of goods within the industrial sector.
D
Aggregate supply is determined by the government to control inflation.

What is the impact of an increase in interest rates on consumer spending?

A
An increase in interest rates reduces consumer spending by making borrowing more expensive.
B
An increase in interest rates increases consumer spending due to higher savings.
C
An increase in interest rates has no effect on consumer spending.
D
An increase in interest rates encourages consumers to spend more on durable goods.

What is the concept of 'monopolistic competition'?

A
Monopolistic competition is a market structure in which many firms sell products that are similar but not identical.
B
Monopolistic competition is a situation where there is only one producer controlling the entire market.
C
Monopolistic competition occurs when there are no barriers to entry in the market.
D
Monopolistic competition describes the conditions where firms are price takers.

What is the impact of a decrease in aggregate demand on output and employment?

A
A decrease in aggregate demand leads to a reduction in output and employment.
B
A decrease in aggregate demand increases output and employment.
C
A decrease in aggregate demand has no impact on output or employment.
D
A decrease in aggregate demand leads to higher wages and increased employment.

What is the role of a central bank in controlling inflation?

A
The central bank controls inflation by adjusting interest rates and using monetary policy tools.
B
The central bank directly controls prices in the market.
C
The central bank reduces inflation by increasing government spending.
D
The central bank has no role in controlling inflation.