Posted by Anjali Kaur on Nov 22, 2021

# Practice Test 5

Practice Test 5, macroeconomics, class XII, CBSE. Questions based on assertion, reasoning and multiple choice options.

Let’s understand this topic. But before that, please subscribe to our newsletter. It’s free of cost.

You can also subscribe to my YouTube Channel. You can also buy my book at Amazon: https://amzn.in/bEGJyKF

Disclosure: Some of the links on the website are ads, meaning at no additional cost to you, I will earn a commission if you click through or make a purchase. Please support me so that I can continue writing great content for you.

## a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correctexplanation of Assertionb. Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).c. Assertion (A) is true but Reason (R) is false.d. Assertion (A) is false but Reason (R) is true.

Answer. Here, the assertion is true. Farmers were not able to get fair prices for their crops because of the removal of the Minimum Support Price. Hence reason is false.

c. Assertion (A) is true but Reason (R) is false. Is the correct option. You can read here, it is one the latest topic.

https://thewire.in/agriculture/punjab-farmers-protest-msp-returns

## 2. Read the following statements Assertion (A) and Reason (R), choose one of the correct alternatives given below:Assertion (A) : An efficient and effective rural credit delivery system is crucial for raising agricultural productivity and incomes.Reason (R) : The agriculture inputs have to be bought from the market for adopting modern day methods of production.ALTERNATIVES:a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correctexplanation of Assertion (A).b. Both Assertion (A) and Reason (R) are true and Reason (R) is not thecorrect explanation of Assertion (A).c. Assertion (A) is true but Reason (R) is false.d. Assertion (A) is false but Reason (R) is true.

Answer. The assertion is wrong because:

Agriculture is a key sector of the Indian economy in view of its contribution to employment and GDP. Agricultural credit plays a vital role in farm sector development and facilitates the adoption of new technologies. However, any amount of credit even at the most reasonable rates cannot guarantee higher productivity or adequate income among the farmers, as the success depends upon many other supporting factors including the availability of agricultural inputs, services, and remunerative markets for the products.

Reason is correct. Read here: https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=942

So, option d. Assertion (A) is false but Reason (R) is true.

## 3. Read the following statements Assertion (A) and Reason (R):Assertion (A) : Demand Deposits are not a part of money supply.Reason (R) The amount available in the demand deposit can be used for purchasing goods and services.FROM THE GIVEN ALTERNATIVES CHOOSE THE CORRECT ALTERNATIVE:a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correctexplanation of Assertion (A).b. Both Assertion (A) and Reason (R) are true and Reason (R) is not thecorrect explanation of Assertion (A).c. Assertion (A) is true but Reason (R) is false.d. Assertion (A) is false but Reason (R) is true.

Answer. Demand deposits are a part of money supply, so assertion is wrong. Read here: Components of money supply

The reason is correct, because demand deposits are those which can be availed on demand, so yes these can be used to buy goods and services. We use our debit card for online transactions is an example of demand deposits.

Option d Assertion (A) is false but Reason (R) is true.

## d. None of these

Answer. If there is a deficit in the current account of BOP, then the Balance of trade which only includes the difference between exports and imports of goods could be in surplus or in deficit.

Hence, option c. Both a. or b.

## 5. READ THE FOLLOWING STATEMENTS CAREFULLY AND CHOOSE THE CORRECT ALTERNATIVE FROM THE FOLLOWING:Statement 1 : Government of India has started many employment generation schemes for alleviation of poverty.Statement 2 : Job less growth has not resulted in a significant decline in poverty situation.ALTERNATIVES:a. Both the statements are true.b. Both the statements are false.c. Statement is true and Statement is false.d. Statement 2 is true and Statement 1 is false.

Answer. Statement 1 is correct, as government of India has started many program to remove poverty.

In a jobless growth economy, unemployment remains stubbornly high even as the economy grows. This tends to happen when a relatively large number of people have lost their jobs, and the ensuing recovery is insufficient to absorb the unemployed, under-employed, and those first entering the workforce.

Statement 2 is also correct, if there is no employment opportunities, then poverty can not be reduced.

Employment acts as a link between economic growth and poverty reduction.

Hence, option A Both the statements are true.

## c. Assertion (A) is true but Reason (R) is false.d. Assertion (A) is false but Reason (R) is true.

Answer. Assertion is the correct meaning of Balance of Payment.

But reason is incomplete, it records inflow and outflow of foreign currency by resident country with rest of the world.

Option c. Assertion (A) is true but Reason (R) is false.

## c. There was a lack of the basic and heavy industries in the country at the time of independence.d. Coastal canal water way project was a success as it was a preferred mode oftransportation during the British rule.

Answer. b. a. Indian economy was a vibrant economy at the time of independence.
b. 85% population was engaged in agriculture. Read here; Indian Economy

## d. Redistribution of income

Answer. b. Creating a surplus BOP

Government budget has specific functions, read here:

## Objectives of the Government budget

1. To increase GDP in terms of the flow of goods and services in the economy. [Economic Growth]
2. To promote the development of the backward region of the country with a view to minimizing regional disparities. [Economic stability]
3. Reallocation of resources with a view to maximizing social welfare.
4. Abundant provisions of public goods particularly in terms of law and order, defense. So that the people of the country can live in a peaceful environment.
5. Redistribution of income and wealth with a view to reducing the gap between rich and poor.
6. Investment in public enterprises with a view to generating more employment opportunities.

## Assertion (A) : India adopted the new economic policy or adopted economic reforms under pressure.Reason (R) : The financial assistance to face the financial crisis came with a condition to open up the economy.FROM THE GIVEN ALTERNATIVES CHOOSE THE CORRECT ONE:Alternatives:a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).b. Both Assertion (A) and Reason (R) are true and Reason (R) is not thecorrect explanation of Assertion (A).c. Assertion (A) is but Reason (R) is false.d. Assertion (A. false but Reason (R) is true.

Answer. a. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). Read about the new economic policy.

## d. LIC

Answer. Bank money means credit creation process by the commercial bank. Hence,

c. Central Bank of India (Remember Central Bank of India is not the central bank, it is a commercial bank)

## d. It does not issue all currency notes.

Answer. c. It creates bank money (This is what commercial banks do)

## d. Population growth rate

Answer. d. Population growth rate. Rest of them are poverty measurement methods.

## c.Self help groups are under non institutional rural credit.d. Micro credit system has reduced the gap between the banks and rural borrowers.

Answer. c.Self help groups are under non institutional rural credit.

Microcredit is a common form of microfinance that involves an extremely small loan given to an individual to help them become self-employed or grow a small business. These borrowers tend to be low-income individuals, especially from less developed countries (LDCs).

## d. (a) and (b) both

Answer. d. (a) and (b) both

Accepting deposits and lending loans are the basic and the primary function of any commercial bank.

Thank You!

Try some more tests:

Disclosure: Some of the links on the website are ads, meaning at no additional cost to you, I will earn a commission if you click through or make a purchase. Please support me so that I can continue writing great content for you.

Subscribe
Notify of