Posted by Anjali Kaur on Nov 11, 2021
Practice Test, Class XII, Economics

Practice Test on Macroeconomics

In this practice test for class XII, Macroeconomics, CBSE. Here, you will find topics like money and banking, the balance of payment, and the government budget.

At the end of this post, you can download the file of the practice test for self-practice.

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1. The Government can achieve its budget objective of ‘Redistribution of Income’ by _________

a. managing the General Price Level in the economy to the desired level.

b. increasing the GDP of the economy

c. bringing the production of goods and services under its direct and absolute control.

d. rationalization of taxes in a pro-poor direction.

Solution. d. rationalization of taxes in a pro-poor direction.

2. Balance of Payments of an economy records ______ for a fiscal year.

a. income and expenditure of the government

b. inflow and outflow of funds of the government

c. inflow and outflow of foreign exchange to/from the economy

d. inflow and outflow of loans to/from the rest of the world

Solution. c. inflow and outflow of foreign exchange to/from the economy

3. Identify which of the following bank does not interact directly with the general public?

a. Bank of India

b. State Bank of India

c. Central Bank of India

d. Reserve Bank of India

Solution. d. Reserve Bank of India

4. Identify which of the following is not an example of ‘invisible item’ under Current account of the BOP transactions

a. Air and sea transport

b. Postal and courier services

c. Education-related travel

d. Merchandise linked transactions

Solution. d. Merchandise linked transactions

5. Ms. Anjali kaur, an economics teacher, was explaining the concept of ‘minimum percentage of the total deposits to be kept by any commercial bank with the Central bank of the country, as per norms and statute prevailing in the country’. From the following, choose the correct alternative which specifies towards the concept explained by her?

  1. Cash Reserve Ratio
  2. Repo rate
  3. Bank rate
  4. Statutory Liquidity ratio

Solution. 1. Cash Reserve Ratio

6. Two friends Palak and Samreet were discussing the exchange rate systems. ‘Under this system, the exchange rates are determined by the market forces of demand and supply. However, delibrate efforts are made by the competent authority to keep the exchange rates within a specific range’. This statement was given by Samreet, identify the type of exchange rate system was she talking about?

  1. Fixed exchange rate
  2. Floating exchange rate
  3. Managed floating exchange rate
  4. Managed fixed exchange rate

Solution. 3. Managed floating exchange rate

7. If the Federal Reserve sets the minimum reserve ratio for private banks at 25%, then the money multiplier is_______

Solution. Money Multiplier (MM or K) = 1/ CRR times

Money Multiplier = 100/25 = 4 times.

8. Fill in the information for Country B, also find current account balance

Solution.

Balance of trade in goods = Exports of goods – Imports of goods

-40 = ?? -(-425)

-40 = Exports of goods + 425

Exports of goods = -465

Balance of trade in services = Exports of services – Imports of services

?? = 165 – (-185)

Balance of trade in services = 350

9. From the given information, determine the following:

a. Capital Expenditure

b. Total Expenditure

c. Interest Payments

Solution: Before going through the solution, revise all the formulas here:

Primary Deficit = Fiscal Deficit – Interest Payment

5000 = 12000 – Interest Payment

c. Interest Payment = 7000

Revenue Deficit = Revenue Expenditure – Revenue Receipts

9000 = Revenue Expenditure – 6000

Revenue Expenditure = 15000

Total Receipts = Revenue Receipts + Non debt creating Capital Receipts

Total Receipts = 6000 + 10000 = 16000

Fiscal Deficit = Total Expenditure – Total Receipts

12,000 = Total Expenditure – 16,000

b. Total Expenditure = 28,000

Total Expenditure = Revenue Expenditure + Capital Expenditure

28000 = 15000 + Capital Expenditure

a. Capital Expenditure = 13,000

Download for self-practice.

Thank You!

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