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Introductory Macroeconomics - Class 12
EconomicsClass 12

Introductory Macroeconomics

Macroeconomics fundamentals

Previous Year Questions

Practice questions from Economics Introductory Macroeconomics

1

Which of the following constitute Capital Account?

  1. Foreign Loans
  2. Foreign Direct Investment
  3. Private Remittances
  4. Portfolio Investment

Select the correct answer using the codes given below:

A. 1, 2 and 3
B. 1, 2 and 4(Correct Answer)
C. 2, 3 and 4
D. 1, 3 and 4

Private Remittances forms a part of the current account and not the capital account.

Capital Account typically includes:

  • Foreign Loans
  • Foreign Direct Investment
  • Portfolio Investment

Therefore, the correct answer is (b) 1, 2, and 4.

Source Attribution:

  • NCERT: Macro Economics
  • Economic Survey
2

Consider the following statements: Human capital formation as a concept is better explained in terms of a process which enables:

  1. individuals of a country to accumulate more capital.
  2. increasing the knowledge, skill levels and capacities of the people of the country.
  3. accumulation of tangible wealth.
  4. accumulation of intangible wealth.

Which of the statements given above is/are correct?

A. 1 and 2
B. 2 only
C. 2 and 4(Correct Answer)
D. 1, 3 and 4

Human capital formation indicates the process of acquiring and increasing the number of persons who have the skills, education, and experience which are critical for the economic and political development of the country. Human capital formation is thus associated with investment in man and his development as a creative and productive resource. Hence, statement 1 is correct.

Intangible wealth consists of factors such as the trust among people in a society, an efficient judicial system, clear property rights, effective government, and a good education system, etc. Human capital formation enables the accumulation of intangible wealth. Hence, statement 4 is correct.

Source: NCERT

3

In the context of Indian economy which of the following is/are the purpose/purposes of Statutory Reserve Requirements?

  1. To enable the Central Bank to control the amount of advances the banks can create.
  2. To make the people's deposits with banks safe and liquid.
  3. To prevent the commercial banks from making excessive profits.
  4. To force the banks to have sufficient vault cash to meet their day-to-day requirements.

Select the correct answer using the code given below.

A. 1 only
B. 1 and 2 only(Correct Answer)
C. 2 and 3 only
D. 1, 2, 3 and 4

A statutory reserve is an amount of cash a financial institution, such as a bank, credit union, or insurance company, must keep on hand to meet the obligations incurred by virtue of accepting deposits and premium payments. The statutory reserves required of banks and credit unions are generally set by the nation's central bank, and those required of insurance companies are set by statute or regulation by the national, state or provincial government or regulatory authority.

Calculated in various ways, statutory reserves are required to ensure that financial institutions are capable of paying claims even in a calamitous situation.

Source: NCERT: Economics

4

Which of the following is not included in the assets of a commercial bank in India?

A. Advances
B. Deposits(Correct Answer)
C. Investments
D. Money at call and short notice

A bank places its funds in assets to earn profits. The assets include:

  • investments
  • loans and advances
  • money at call and short notice
  • bills discounted and purchased
  • cash in hand with the banks
  • cash held with the RBI

It also includes the liabilities which include deposits (both time and demand) and borrowings.

Hence (b) is the correct answer.

Source: Introductory Macroeconomics: NCERT Class Economics

5

With reference to chemical fertilizers in India, consider the following statements:

  1. At present, the retail price of chemical fertilizers is market-driven and not administered by the Government.
  2. Ammonia, which is an input of urea, is produced from natural gas.
  3. Sulphur, which is a raw material for phosphoric acid fertilizer, is a by-product of oil refineries.

Which of the statements given above is/are correct?

A. 1 only
B. 2 and 3 only(Correct Answer)
C. 2 only
D. 1, 2 and 3

The Government of India subsidizes fertilizers to ensure that fertilizers are easily available to farmers and the country remains self-sufficient in agriculture. The same has been achieved largely by controlling the price of fertilizer and the amount of production. For example, as per the New Urea Policy of 2015, the government fixes the market price of urea. Also, there is a fixed subsidy component as well. Similarly, for Phosphorous and Potassium, as per the Nutrient Based Subsidy Scheme of 2010, subsidy is provided based on nutrient content per kg of fertilizer. Hence, statement 1 is not correct.

Fertilizer production uses 1.2% of the world’s total energy, out of which 90% is used for ammonia production, which is a key ingredient in the production of nitrogen fertilizers. Ammonia can be produced from natural gas. Hence, statement 2 is correct.

Sulfur is a major by-product of oil refining and gas processing. Most crude oil grades contain some sulfur, most of which must be removed during the refining process to meet strict sulfur content limits in refined products. Industries, for instance, the Mathura oil refinery, have been responsible for producing pollutants like sulphur dioxide and nitrogen dioxide. Also, Sulphur is used in phosphoric acid fertilizer (There is a process known as The Wet Process for producing the same). Hence, statement 3 is correct.

Sources:

  • NCERT: Class 9 Science

Previous Year Questions

Test your knowledge with these practice questions

Question 1 of 50 / 5 answered
1

Which of the following constitute Capital Account?

  1. Foreign Loans
  2. Foreign Direct Investment
  3. Private Remittances
  4. Portfolio Investment

Select the correct answer using the codes given below:

Topic: Balance of PaymentsYear: 2013

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