MODEL PAPER 2025 Economics - MODEL PAPER 2025

Based on the given diagram: The trade under current account during January 2024 reflects a ___________of USD ___________ billion.

Read the following statements carefully:
Statement 1: Foreign grants-in-aid receipts do not lead to any claim on the government.
Statement 2: Disposal of equity by the Public Sector Undertakings in the market may lead to a decrease in the assets of the government.
In light of the given statements, choose the correct option from the following:

In a two-sector economy, Aggregate Demand can be determined by adding ___________.

Read the following statements carefully:
Statement 1: The maximum value of Marginal Propensity to Consume (MPC) can be unity.
Statement 2: As the income of an economy increases, the proportionate increase in the level of consumption is always more than the increase in the level of income.
In light of the given statements, choose the correct option from the following:

As per the data presented in the Union Budget 2023-24, the total receipts of the government other than borrowings and the total expenditure are estimated at ₹ 27.2 lakh crore and ₹ 45 lakh crore respectively. The value of the ___________ deficit would be ₹ 17.8 lakh crore.

"Tax revenue collection of the government may be categorized under two heads.”
State and explain the two heads of tax revenue.

State the steps pertaining to the estimation of National Income under the income method.

On the basis of the given data, estimate the value of Domestic Income (NDPFC):

S. No	Items	Amount (₹ in crore)
i	Household Consumption Expenditure	800
Ii	Gross Business Fixed Capital Formation	150
Iii	Gross Residential Construction Investment	120
iv	Government Final Consumption Expenditure	170
v	Excess of Imports over Exports	20
Vi	Inventory Investment	140
vii	Gross Public Investment	500
viii	Net Indirect Taxes	70
ix	Net Factor Income From Abroad	(-)50
x	Consumption of Fixed Capital	40

Read the following text carefully:
“Union Finance Minister stated, that investments in infrastructure and productive capacity have a large multiplier impact on growth and employment and in view of this, capital investment outlay is being proposed to increase steeply in the Budget 2023-24 by 1,000 crore”.
Based on the given text and common understanding, explain the working process of the increase in investment on the National Income, assuming the Marginal Propensity to Save (MPS) as 20%.

“Saving curve can be derived from the consumption curve” Justify the statement, citing valid steps with the help of a well-labelled diagram.

(i) “Basis of classification of final goods into consumption and capital goods depend on the economic nature of its use.”
Defend or refute the statement, with the help of a suitable example.
(ii) ‘Natural calamities in the hill states of India have led to massive destruction of capital assets.’ Identify the type of loss (depreciation or capital loss) indicated in the aforesaid statement. Give valid reasons in support of your answer.

(i) On the basis of the following hypothetical data: (all figures in ₹ crore)

Year	Nominal	Nominal GDP adjusted to base year
2020	3,000	4,000
2023	4,000	4,500

Calculate the percentage change in Real Gross Domestic Product in the year 2023 using 2020 as the base year.
(ii) “The public investment on the construction of a multi-lane flyover may reduce traffic congestion.” On the basis of the above statement, discuss its likely impact on Gross Domestic Product (GDP) and welfare in an economy.

Read the following text carefully:
As societies developed from hunters and gatherers, the material needs of human beings increased – to build a house, wear clothes, make weapons and implements etc. Since these needs could not be produced individually, people had to purchase them from others. These purchases, for example, were paid initially by barter – a leather skin cloak for a spear. As barter had its limits – how many cloaks for a spear – barter got standardized in terms of metals or cowrie shells. Now people knew the value of both the cloak and the spear in terms of bronze or cowrie shells. This was still barter, as both bronze and shells had intrinsic value (shells were desired for their beauty). This system evolved over time into metal currencies. Gold and silver coinage were the offshoot of this system where they had features of barter (both gold and silver had intrinsic value) as well as money (they were standardized representation of value).
In respect of money two facts emerge historically:

• Money has taken the form of either commodities (which have intrinsic value) or in terms of debt instruments.
• Money is usually issued by a sovereign (or a Central Bank as its representative).

In modern economies, currency is a form of money that is issued exclusively by some competent authority (Central Bank). It is a liability of the issuing Central Bank and an asset of the holding public. Currency is usually issued in paper (or polymer) form, but the form of currency is not its defining characteristic.
n the recent past, the Reserve Bank of India, issued Central Bank Digital Currency (CBDC). A CBDC is the currency issued by a central bank in a digital form. It serves all the purposes of a paper currency in a different form. The introduction of CBDC has the potential to provide significant benefits, such as reduced dependency on cash, lower transaction costs, reduced settlement risk. Introduction of CBDC would possibly lead to a more robust, efficient, trusted, regulated payments option. There are associated risks such as cyber-attacks and technology preparedness, but they need to be carefully evaluated against the potential benefits.
On the basis of the given text and common understanding, answer the following questions:
(i) “Over the centuries, money has evolved in various forms.” In the light of the given statement, state and discuss briefly any two forms of money.
(ii) “Various economists have formed a strong opinion that, in the modern times digital currency (like CBDC) is quite essential. However, it comes with its own benefits and potential risks.”
Do you agree with the given statement, giving valid arguments in support of your answer.

During the period 1951-2016, __________ led to an increase in the milk production in India by about ten times.

“Assuming in a hypothetical economy, Real Gross Domestic Product recorded a growth rate of 9% during a fiscal year. However, the economy faced a significant challenge in terms of creating an adequate number of employment opportunities.”
Identify the situation indicated in the given statement and choose the correct option.

___________ was setup in 1974 by the Indian government to address two major environmental concerns viz. water and air pollution.

China's demographic problem of 4-2-1, resulted in a higher proportion of elderly individuals compared to the younger population. This was primarily due to the implementation of ___________.

Identify, which of the following statement is incorrect about the financial sector reform introduced in 1991?

‘To measure the extent of development in an economy, liberty indicators should be considered along with other socio-economic parameters.’ Do you agree with the given statement? Give valid reasons in support of your answer.

‘Globalisation is an essential outcome of liberalisation of an economy’.
Justify the given statement with a valid explanation.

Critically appraise the disinvestment policy initiated by the government during the reforms of 1991.

(i) Interpret the given picture based on the Saansad Adarsh Gram Yojana (SAGY) initiated by the Government of India.

(II) State any two examples of allied activities.

‘It would be unclear to say that, the growth of human capital lays the ground for economic growth of a nation.’
Do you agree with the given statement? Support your answer with valid illustrations.

‘Under the Delhi Declaration, the G-20 nations pledged to reach global net zero emissions approximately by mid-century and to triple global renewable energy capacity by 2030.’
Discuss briefly the rationale behind the commitment by G-20 nations in the direction of achieving sustainable development.

‘The reform process implemented in the late 1970s, commonly known as China’s open door policy, encompassed a wide range of reforms across sectors like agriculture, investment, industry etc. These reforms played a pivotal role in driving the rapid growth of the Chinese economy over subsequent decades.’
In the light of the given text, discuss any two reforms responsible for the rapid economic growth of China.

(i) ‘During the colonial period, India’s foreign trade was characterized by a large export surplus, however, this did not result in any flow of gold or silver into India.’
Justify the given statement with valid arguments.
(ii) Explain the rationale behind choosing 'Self-reliance' as a central planning objective in India's development strategy.

(i) ‘Under the Industrial Policy Resolution (IPR) 1956 in India, the system of industrial licensing was introduced to promote regional equality.’ Justify the given statement with valid arguments.
(ii) Discuss briefly the estimates made by notable scholars regarding the national income and per capita income during the colonial rule in India.

Read the following text carefully: Employment generation has remained one of the top challenges of Indian policymakers, and over the years, this has only become more complex. India has experienced more or less consistent growth in the structure of the output of the economy, especially after the economic reforms which is measured by gross value added. However, the trend in employment did not reveal a consistent and clear pattern.
These complexities have led to a wide variation in the conclusions drawn by experts and various studies on workforce and employm.
Two major sources of data on the workforce and employment have been the
(i) decennial population census and
(ii) nationwide quinquennial surveys on employment and unemployment by the erstwhile NSSO under the Ministry of Statistics and Programme Implementation (MoSPI), Government of India.
The nationwide Employment and Unemployment (E&U) surveys have been replaced by the Periodic Labour Force Survey (PLFS) conducted by the National Statistical Office (NSO) of MoSPI, which started in the year 2017–18.
According to NSO, the PLFS data measure the dynamics in labour force participation, workers to population ratio and the employment status along with related, important parameters for both rural and urban areas.
Labour force includes persons who were either working (or employed) or those available for work (or unemployed). Some persons in the labour force are abstained from work for various reasons. Deducting that number from the labour force gives the number of actual workers. These workers are further categorised as persons who are engaged in any economic activity as selfemployed or regular wage/salaried and casual labour. The difference between the labour force and the workforce gives the number of unemployed persons.
The size of the labour force in the country has increased from 485.3 million in the year 2017–18 to 497.4 million in the year 2018–19. The next year, the labour force increased by 8 per cent and reached 537.9 million. This increase was witnessed across male and female populations as well as rural and urban households.
On the basis of the given text and common understanding, answer the following questions:
(i) State any two major sources of data on the workforce and employment.
(ii) ‘The labour force encompasses a broader category than the workforce.’ Defend or refute the statement, giving valid reasons in support of your answer.
(iii) ‘Workers can be categorized into different types depending on their status.’ In the light of the given statement, state any one type of employment.