Kerala Plus Two Economics Board Model Paper 2023 with Answers

Teachers recommend solving Kerala Syllabus Plus Two Economics Previous Year Question Papers and Answers Pdf Board Model Paper 2023 to improve time management during exams.

Kerala Plus Two Economics Board Model Paper 2023 with Answers

Time : 2 1/2 Hours
Total Scores : 80 scores

Answer any 8 questions from 1 to 10. Each carries 1 score:

Question 1.
The goods and services which are purchased and used by its ultimate consumers are known as:
(a) Intermediate goods
(b) Consumer goods
(c) Raw materials
(d) Investment goods
Answer:
(b) Consumer goods

Question 2.
“A firm cannot vary all its puts in their production process”. If so which of the following is associated with the above statement?
(a) Increasing Returns to scale
(b) Constant Returns to scale
(c) Short-run Production function
(d) Long-run Production function
Answer:
(c) Short-run Production function

Question 3.
The inputs used in the production process is known as:
(a) Production Function
(b) Factors of Production
(c) Cost Function
(d) Total Product
Answer:
(b) Factors of Production

Question 4.
The demand curve of a firm under perfect competition is:
(a) Perfectly elastic
(b) Download slopping curve
(c) Upward sloping curve passing through the origin
(d) Perfectly inelastic
Answer:
(a) Perfectly elastic

Question 5.
Which of the following is associated with the problem of ‘Choice’?
(a) Abundance of resources
(b) Efficiency in technology
(c) Increase in productivity
(d) Scarcity of resou rces
Answer:
(d) Scarcity of resou rces

Question 6.
In the equation, P₁ x₁ + P₂ x₂ = M slope of the budgent line is :
(a) -P₁/P₂
(b) P₁ x₁
(c) M/P₂
(d) M/P₁
Answer:
(a) -P₁/P₂

Question 7.
The apex monetary institution in India is :
(a) State Bank of India
(b) NABARD
(c) Reserve Bank of India
(d) Government
Answer:
(c) Reserve Bank of India

Question 8.
Annual functional statement of the government is known as:
(a) Budget
(b) Financial report
(c) Revenue Report
(d) Capital account report
Answer:
(a) Budget

Question 9.
Which of the following shows consumption function?
(a) Relation between Concumption and Savings
(b) Relation between Consumption and Income
(c) Relation between Consumption and Investment
(d) Relation betweerj Savings and Income
Answer:
(b) Relation between Consumption and Income

Question 10.
The market in which national currencies are traded for one another?
(a) Share Market
(b) Good Market
(c) Factor Market
(d) Foreign Exchange Market
Answer:
(d) Foreign Exchange Market

Answer any 4 questions from 11 to 15. Each carries 2 scroes.

Question 11.
List any two sources of capital receipts of government budget.
Answer:
Borrowings and recovery of loans and advances

Question 12.
Write any two methods of cashless transaction (other than currency notes and coins) in an economy.
Answer:
Online transfers like NEFT or RTGs, transactions through UPI apps.

Question 13.
Write the economic terms for the following :
(a) The Price at which market demand is equal to market supply.
(b) The situation in which if at a price, market supply is greater than market demand.
Answer:
(a) Equilibrium price
(b) Excess supply

Question 14.
List any two features of Total Revenue Curve of a firm under perfect competition.
Answer:
a) TR is zero when output equals zero.
(b) As output increases TR also increases, TR is upward sloping curve.

Question 15.
Find out the vertifcal intercept and horizontal intercept from the given budget line equation :
5x₁ + 2x₂ = 20
Answer:
Horizontal Intercept
\(5 x_1=20 \quad x_1=\frac{M}{P_1}=x_1=\frac{20}{5}=4\)
Vertica Intercept
2x₂ = 20
x₂ = \(\frac{M}{P_2}=\frac{20}{2}\) = 10

Answer any 4 questions from 16 to 20. Each carries 3 scores.

Question 16.
List any three properties of indifference curve.
Answer:
(1) Indifference curves slope downward from left to right.
(2) Indifference curves are convex to origin.
(3) Indifference curves do not intercept each other.

Question 17.
Explain the three laws of Returns of Scale.
Answer:
Return to scale refers to long run production function. According to the changes made in inputs, output level changes in three different ways as follows;
(1) Increasing Retruns to Scale (IRS)
(2) Constant Returns to Scale (CRS)
(3) Diminishing Returns to Scale (DRS)

Question 18.
Explain how do the following situations affect the supply curve of a firm by using diagram :
(a) Price of inputs used in the production increases.
(b) Technology using is advanced.
Answer:
(a) When the price of input increases

From the above diagram it is clear that when there is an increase in input price, the supply curve of the firm shifts towards left, indicating decrease in supply, (ie., change from Sto S₁)

(b)

Supply curve of the firm shifts towards right when there is an advancement in technology. The change is represented in diagram, S is original supply curve, ie. supply curve before technology upgradation, S., is new supply curve due to updation of technology. Bank deposits, population of a country, capital, are stock variables.

Question 19.
Classify the following variables into Stock and Flow: Bank Deposit, Population of a country, Capital, Investment, Birthrate, National Income
Answer:
National Income, Birth rate, Investment are flow variables.

Question 20.
Write the three ways in which an open economy can establish economic linkages with other countries.
Answer:
(1) Product Market linkage
(2) Financial market linkage
(3) Factor Market linkage

Answer any 4 questions from 21 to 25. Each carries 4 score. (4 × 4 = 16)

Question 21.
Explain the flexible exchange rate system using a diagram.
Answer:
Under flexjble exchange rate system exchange rate is determined according to changes in demand and supply of foreign exchange.

The above given diagram explains how exchange rate is determined under flexible exchange rate system. D is initial demand curve where ‘e’ is exchange rate when demand increased from D to Di as a result exchange rate changed from ‘e’ to e-i.

Question 22.
Prepare a short note on the emergence of macro-economics.
Answer:
Macro economics has emerged as a new branch of economics after global economic crisis of 1928. It was the work done by J.M. Keynes acted as a catalyst for the growth of Macro economics. J.M. Keynes criticised classical economists for their unrealistic assumptions related to working of economic factors. The views of classical economists were wrong and misleading and they failed to solve economic crisis. During this time Keynes published his famous book “General Theory of Employment Interest and Money” in 1936, which acted as a guide to solve-the global economic crisis. Later the. views of Keynes popularly known as Macro economics.

Question 23.
Graphically illustrate the circular flow of income in a two sector economy.
Answer:

• Here households provide factors of production to the firms for this firms provide factor payment.
• Firms provide goods and services required to the household and households give payment as price.

Question 24.
(a) Distinguish between Micro-economics and Macro-economics.
(b) Classify the following into micro-economics variable and macro-economic variable. Resources of an economy, output of a firm, unemployment rate, individual investment.
Answer:
The study of individual units of the economy is known as Micro economics
(a) The study of economy as a whole is known as Macro economics.
(b) Micro economics variable individual investment.
(c) Macro economic variable : Resources of an economy, unemployment rate.

Question 25.
Analyse Price Ceiling with the help of diagram.
Answer:
Government Intervention in market against increasing price levels of essential commodities by fixing a lower price than equilibrium price is known as price ceiling.

‘E’ is the equilibrium in the above given diagram where ‘ep’ is equilibrium price. When government felt ‘ep’ is very high and unaffordable for the poor, fixed a new price ‘Cp’ which is ceiling price and lower than ‘ep’. Through this government protects common people from the adversities of price increase.

Answer any 4 questions from 26 to 30. Each carries 5 scores. (4 x 5 = 20)

Question 26.
Analyse the optimal choice of the consumer by drawing Indifference curve and Budget line.
Answer:
Optimal choice of consumer or consumer equilibrium can be defined as the position of maximum satisfaction attained by a consumer. According to indifference curve approach a consumer attains equilibrium at the point where budget line is tangent to indifference curve. It can be expressed with the help of a diagram.

The above given-diagram shows consumer equilibrium. HereAB is budget line of consumer and IC₁, IC₂ and Ic₃ are different indifference curves. Point ‘E’ is the region where highest possible indifference curve (Ic₂) tangents with budget line so that particular point (E) is called consumer equilibrium.

Question 27.
(a) At a price Rs. 6 the consumer demands 30 units of a good. Suppose the price of the good increases to Rs.8 and as a result, the demand for the good falls to 24 units. Calculate Price elasticity of demand.
(b) Some points are marked in the following linear demand cunie. Mark the correct value of price
elasticity of demand corresponding to each point.
Answer:
Degree of responsiveness of quantity demanded of a commodity towards changes in price of that commodity is knowp as price elasticity of demand
Price elasticity of demand = \(\frac{\Delta Q}{\Delta P} \times \frac{P}{Q}\)

where ∆Q Change in quantity demanded
∆P Change in price
Q Original quantity demanded (previous demand)
P Original price (previous price)
P = 6, Q = 30
New price = 8
New quantity demanded = 24
∆P = 8 – 6 = 2
∆Q = 30 – 24 = 6
∴ \(\frac{\Delta Q}{\Delta P} \times \frac{P}{Q}=\frac{6}{2} \times \frac{6}{30}\)
= \(\frac{36}{60}\) = 0.6

(b) 1. Elasticity at A = ∞
2. Elasticity at B = 1
3. Elasticity at C = less than I
4. Elasticity at D = O (Zero)

Question 28.
Explain the profit maximising level of output of a firm under perfect competition in the short-run (Hint: 3 conditions), using diagram.
Answer:
Perfect competition is a market situation where large number of buyers and sellers dealing with
homogenous product.

Features of perfect competition

1. Large number of buyers and sellers.
2.  Homogenous product
3. Perfect information
4. Uniform price
5.  Freedom of entry and exit

Profit maximisation condition of a firm in short run under perfect competition.
Three Conditions
1. P = Me
2. MC should cut MR from below
3. Price should be greater than or equal to AVC Here the above mentioned three conditions follows ie. (1) P = MC
(2) MC cuts MR from below
(3) P > AVC

Question 29.
(a) Write the components of aggregate demand in a two sector economy.
(b) Explain the effect of multiplier mechanism on equilibrium income withe the help of a diagram.
Answer:
A two sector economy consists of households sector and Industries.
(a) Aggregate demand is the total demand of an economy, it is denoted as AD. It has two components they are consumption demand (c) and Investment demand (I)
so AD = C +1
(b) Income multiplier is also known as output multiplier or autonomous expenditure multiplier. It is the ratio of change in income to change in investment.

From the diagram it is clear that when a small increase in investment. ie.,(AI) brings a large increase in Income from Y₁ to Y₂.

Question 30.
(a) Write any two features of Public Goods.
Answer:
(a) Features of public goods

1. Non rival in nature
2. Non exclusion

(b) Objectives of government budget

1. Reduction of inequality
2. To attain economic growth
3. To attain economic development
4. Generation of more employment opportunities.

Answer any 2 questions from 31 to 33. Each carries 8 scores. (2 × 8 = 16)

Question 31.
(a) List any four functions of Central Bank.
(b) Analyse the functioning of any two quantitative credit control instruments of Central Bank.
Answer:
Functions of central bank
(a) 1. Issue of currency
2. Bankers bank
3. Banker to the government
4. Controller of credit /money supply

(b) Central bank controlls the supply of money through two different methods they are
1. quantitative credit controll measures
2. qualitative credit controll measures

Two quantitative credit controll measures are:
1, Bank rate
2. Reserve ratios

Question 32.
(a) A Garment making unit produces 200 shirts and sells it at a price of Rs. 500 each. Raw materials worth Rs. 20,000 is used and depreciation charges is Rs. 5,000 during the production period. Calculate value added and net value added of the unit.
(b) Explain any two methods of calculating GDP of an economy.
Answer:
Total revenue of the unit =

Cost of raw material = 20000
Value added = I ,00,000 – 20,000 = 80000
Net value added =
Value added – depreciation charges
= 80,000 – 5000
= 75,000

(b) GDP of an economy can be. calculated through three different ways, they are
1. Product method
2. Income method
3. Expenditure method

1. Product method: Here GDP is calculated by adding value of all final goods and services produced in a nation during a financial year. Value of output = Market price x Output This method is otherwise known as value added method.
2. Income method: Here GDP is calculated by adding together all the factor incomes received by the owners of factors of production in the form of rent, wage, interest and profit. ie. W +R + I +P
3. ExpendIture method:.
   As per expenditure method GDP is calculated by adding all expenditures made within the country during the accounting year, that means it in cludes both public expenditure and private ex poenditure.

Question 33.
(a) Given below is the cost schedule of a firm. Total Fixed Cost is Rs.100. Calculate TVC, AVC, AFC, AC and MC and complete the chart:
Answer:
(a)

Output	TC	TFC	TVC	AVC	AFC	AC	MC
0	100	100	0	–	–	–	–
1	120	100	20	20	100	120	20
2	140	100	40	20	50	70	20
3	150	100	50	16.66	33.33	50	10
4	155	100	55	13.75	25	38.75	5
5	170	100	70	14	20	34	15
6	200	100	100	16.66	16.66	33.33	30

TVC = TC – TFC
AVC = \(\frac{\mathrm{TVC}}{\mathrm{Q}}\)
AFC = \(\frac{\mathrm{TFC}}{\mathrm{Q}}\)
AC = \(\frac{\mathrm{TC}}{\mathrm{Q}}\)
MC = \(\frac{\Delta \mathrm{TC}}{\Delta \mathrm{Q}}\)

(b) Draw Average Fixed Cost (AFC) curve and comment on its shape.
Answer:
(b) Average fixed cost curve

TFC is constant at all levels of output. So when output increases AFC will decrease continously. The shape of AFC is rectangular hyperbola.